Interest Only

Interest only payments feature allow you to make minimum interest payments for a set period of time, then full principal-and-interest payments for the rest of your loan term. At the end of the interest-only period, you will be required to pay down the outstanding principal, which will increase your monthly payment, possibly substantially, even if you have a fixed interest rate. Always consider making more than the minimum payment during the interest-only period to begin reducing principal. Depending on the product specifics, a loan with the Interest-Only payment feature may result in higher interest rates or Annual Percentage Rates than a traditional mortgage product.