Interest Only Mortgages

Overview

With an interest only mortgage, your required payment during an initial period covers only the interest on the loan, not the principal. That keeps your monthly payment lower at the start. After the interest only period ends, the payment adjusts to include principal so the loan can be paid off over the remaining term.

How it works

You choose an interest only period, for example the first several years of the loan. During that time you can still pay toward principal if you wish, but you are not required to. When the period ends, your payment increases to fully repay the loan. It is important to plan for that change, and we will walk you through the numbers so there are no surprises.

Key features

• Lower required payments during the interest only period.
• Flexibility to pay extra toward principal when you choose.
• Useful for borrowers with variable income or specific cash flow goals.
• Payment increases once the interest only period ends.

Who it is for

Borrowers who want lower initial payments, expect their income to rise, or have income that varies through the year, and who understand that the payment will increase later.

What you will typically need

• Income documentation and tax returns.
• Bank and asset statements.
• Photo identification and Social Security number.
• Details on the property you want to buy or refinance.

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