Interest-only payments can be an attractive and useful option among jumbo home loans. The rate is fixed for a period of 5, 7 or 10 years when clients can choose to pay only interest on the principal balance. After that time, the mortgage payment changes to a traditional amortized structure over the remainder of the term.
An interest-only mortgage can be beneficial:
- When you want to use the money saved for other investments.
- When you plan to be in the home for only a short period of time.
- When you earn a sizable bonus or income from commissions and want the ability to make larger, irregular payments to cut down on principal faster.
- When you prefer to keep monthly payments low for a period of time.
- When there is already substantial equity in the property.