Can you afford interest only mortgages?

Interest only mortgages often receive a bad reputation due to borrowers whom opt to select this type of loan without fully weighing the pros and cons of doing so. The myths and confusion surrounding interest only mortgages are plentiful, but can easily be dispelled if only people would do a little research for themselves or even seek the help of qualified mortgage brokers who are very knowledgeable on the subject matter.

Don't be confused

The name given to interest only loans is often one of the reasons why individuals become confused. Don't let the name fool you, the title of "interest only loan" can be applied to practically any type of loan and does not mean that you will only pay the interest. As a matter of fact, you will eventually be paying the principal amount on the loan and chances are you'll be paying it at a high rate of interest if you've initially only been paying the interest portion. Interest only loans come with a term limit attached to the interest only portion, which means that once this time is up you'll be paying both the interest and principal.

Can you afford an interest only mortgage?

Interest only mortgages are not ideal for everyone; it's just that plain and simple. But they do offer distinct benefits to some potential borrowers, just as all home loans do. If you fall into one of the following categories then taking a deeper look at interest only mortgages is strongly advised:

� Those who earn a salary that can vary greatly during the year but is supplemented by commissions, bonuses, or other substantial but infrequent amounts of income

� Individuals who will increase their earning potential in the next few years

� Investors who are looking for a way to leverage debt

� Those who have a moderate loan balance and want access to more money to use in other ways

Interest only loans are not ideal for individuals who:

� Earn moderate salaries

� Those who do not have a plan of action for the money they will initially save with the loan

�Individuals who are looking for a way to purchase a home they can not afford

Only you know what you can afford and interest only mortgages are a great way to make your dreams of homeownership and other financial prospects a reality, if you are qualified.

Speak with the Choice Home Loan team of experts to help you pick the mortgage that is best for you.

by Marcus Brady