What is an interest-only mortgage and should I get one?

Short answer: Only pay interest, not the loan. Lower payments but debt never shrinks. Rare for first home buyers.

What this actually means in plain English

You only pay the interest, not the loan itself. Your payments are lower but your debt never shrinks. Banks rarely give interest-only loans to first home buyers. They are mainly for investors. If you do get one, you need a plan to start paying the loan later. Otherwise you never own the house.

Key Facts

Payments cover only interest, not principal
Loan balance stays the same
Lower monthly payments
Rarely available to first home buyers
Common for property investors
Must have plan to switch to principal + interest later

Example

Loan Amount: $500,000

Interest Only Payment: $2,917/month

Principal And Interest: $3,327/month

Difference: $410/month lower

After Five Years: Still owe $500,000

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