Getting a 'Flexible' Interest Only Mortgage
There are a few good reasons to get a “flexible” interest-only mortgage. For example on a traditional 30-year loan about 70% of the payments you make go towards the interest for the first six or seven years. If you get the loan at a good rate, you can take what you have saved and invest it in something that would bring a higher rate of return. In a few years, you could save enough money to pay down other debts that you may have acquired with the money you have freed up by just paying the interest on your mortgage.
A flexible loan is perfect for those that don’t expect to be in their home long term but may move onto a bigger and better home. With any mortgage loan, the major portion of the payments for the first year goes towards the interest. Many people like the freedom they gain by just having to make payments to the interest. For someone who is thinking of selling their house a few years down the road, flexible interest only loans can be the answers for saving some money.
Some people think that if they are not paying on the mortgage principle they are not building equity in their home. However, with the rate that the market is changing, equity is actually building up faster than you think. This helps to dispel the fears that some homeowners have and they find that the equity is there regardless of the type of mortgage they decide on. When you get an interest only mortgage, it gives you a lot of options that you wouldn’t have otherwise. You can save the extra money for your child’s college fund, make home improvements on the home you have now or use the extra money to pay off some credit cards that have been hanging around. These are all useful things that would certainly eat up your money anyway and it is always nice to know you can do this and still feel secure.
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