Interest-Only Loan
An interest-only loan allows borrowers to pay only interest for an initial period. Principal repayment begins after the interest-only phase ends.
These loans can lower early payments but may lead to higher payments later. They are common in certain mortgages and investment financing.
Related Terms
Mortgage
A mortgage is a loan used to purchase real estate, where the property serves as collateral. The borr...
Interest
Interest is the cost of borrowing money or the return earned on deposited funds, typically expressed...
Principal
Principal is the original amount of money borrowed in a loan or the original amount invested. It doe...
Amortization
Amortization is the process of paying off debt through regular payments over time. Each payment cove...
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