Interest mortgage Deals: Pros and Cons.
There are always two sides to a story. Just as interest mortgage favours a mortgagor at some point, it also has side effects also which also needs to be looked into to ensure good decision making.
Maybe we really need it to go back to what interest mortgage loans are:
Interest only mortgage is the type of mortgage where the loan received by a mortgagor is not paid or added to what he is paying immediately. Instead, he starts by paying back the interest usually not lasting more than ten (10) years. After paying back the interest, the principal ammount still remain as a standing debt for him which he would then pay in a lump sum. This brings us to the Pros and Cons of Interest Mortgage Deals.
-It allows for the mortgagor to settle other pressing issues around them
-It gives time for mortgagors to be financially stable, based on whatever circumstances surrounding the challenge, before the large capital is cleared off.
- At the end of the agreed number of years, the money may still not be available to be paid back which could lead to bankruptcy. Sometimes, there may be a pan, usually by the mortgagor, but some inevitable circumstances may lead to the money being tampered with because there are no restrictions placed by anyone on the funds and how they should be handled.
-At the end of paying the interest, the principal amount which is usually large is still there.
-If the interest rates are not fixed, increase in the rate could affect the interest rate of the mortgagor and he would have to pay up eventually.
All these aforementioned may come in handy if you need any necessary information as regards interest only and its strength and weaknesses (check www.newcityfinancial.com for more info.