Skip to main content

What are Interest Only Home Loans – Simplified Facts on Interest Only Home Loans



What are interest only home loans.  ‘Interest only home loans’ means that the borrower ends up paying only the interest for some years and then the principle amount is added later for years. 
This has risen as a better option for many who are not in position to pay large amounts as EMI’s in present years. Usually for homes bought in construction phase, you keep paying small amounts of interest.
In this type of offer the lender gives money to the borrower and the purchase deed is completed. The borrower becomes the owner of the house. Every month he has to pay a small amount that is interest to the principle amount (loan amount). During later years, as   the construction progresses and the housing complex is ready  he has to pay the interest along with large sums of the principle amount. This option may be good for individuals who are highly qualified and have a new job and they know that over the years their salary is going to increase with their experience. So they can pay smaller amounts in present years and later on be prepared to pay larger sums to complete the loan repayment. 
What are interest only home loans
Pay Interest Only Home Loans

However , interest only home loans option may  also be very risky as no one can predict about later years. The large amounts of money as loans later on can be very difficult to pay back and one may end up in financial tight spot. Some people also take this type of home loan if they are confident about the price rise of their property. They can pay the interest amount and later as the value of their house increases they can sell this and make profit as well as pay the larger loan amount.
Though a boon to many there are certain risks every individual has to take before going in for an interest only home loan. Their job stability may not be guaranteed over the years and only those individuals who are very confident about their financial growth must go in for such type of loan. Also the property value may drop or remain same so the individual may end up paying more than they actually paid for the purchase of the flat some years back. This may result in financial losses and also it may become difficult to sell the house during payments of large amounts of loan.
Labels:

Comments

Post a Comment

Popular posts from this blog

Get Easy Tax Concessions Bonus on Home Loans

Easy tax concessions are a added bonus with your home  loan. Purchasing a home has become the most sought   after   dream today. Our major salary can go in terms of repaying home loans. With property rates increasing day by day it is becoming more and more difficult to purchase a home even on loan. The principle amount is increasing and also the interest rate added puts a tight crunch on our monthly salary. Tax concessions and rebates come as a boon to lighten this burden a little bit. Is it possible to get tax rebate on the loan amount? Many of us are not aware that this is taxable income money and one can avail rebate on a certain amount. If all returns are filed regularly and all criteria for applying for a home a loan fulfilled then one can avail on tax rebate for a certain amount of the money taken as loan. The main criteria would be the loan has to be taken in the prior financial year and the project has to have a fixed date for completion. The possession of th...
Post a Comment
Read more

Washington Home Loans

An interest-only loan has become a very popular choice of the many Washington home loans that are available.  What is making this type of loan so popular?  What other options are available to potential Washington home buyers. If you have a desire for a lower initial monthly payment, lower payments over shorter period of time, the possibility that if rates improve your rates could go down giving you lower payments, the fact you may qualify for even an even higher loan amount which would allow you to purchase a larger house than originally you thought this may be an option you should investigate.  There are a couple of other things you may need to consider.  Your payments may change over time.  There is also the potential for higher payments if the rates go up.  These interest-only loans normally interest only for a specific period of time.  The normal time is 4 to 11 years then the payment is raised to a normal level.  This type of an option c...
1 comment
Read more

Documents required during the Processing of home loans for the salaried class Documents required during the application of Home Loans salaried professionals application and processing of home loans for the salaried class

Borrowers   think about taking a home loan the impression of making many rounds of the lending institution or bank is the picture created in our minds. Usually borrowers repel with the idea of convincing the authorities of their financial status and the capacity for repayment. But this is not always so. If a borrower can get prior information regarding the documents and procedure required for taking a home loan it would ease out many difficulties and also make the process of purchasing a home a more pleasant one. The salaried class are the ones which can get loans easily as they have their salary slips and work experience records that can help to show their financial standing in the society. Assurance of the required amount as salary is a important assurance for the financial institutions or private lenders to approve of the loan amount applied for.   People working for a company or government and getting regular monthly salary can be termed as salaried class. Preparing befor...
Post a Comment
Read more