INTEREST ONLY MORTGAGE


An "interest-only" mortgage is like a line of credit. You can pay only the interest on the mortgage. This can greatly reduce your payments in time of financial stress. However, it also means that the debt will never be paid off.

The only reason to use an interest-only mortgage is either to relieve short-term financial stress or when you have an investment property that is building equity because the market price is going up. It may also make sense if you can completely write off your mortgage interest a part of a business venture. If it will reduce your taxes it can be a good deal. Otherwise, most of us should stay away from this kind of mortgage.

Before taking an interest-only mortgage, speak with a financial advisor and see if there are sound financial reasons for you to do this.