Interest-only mortgages have a few disadvantages to them. These are the most common concerns formulated around an interest-only mortgage:



1.It's riskier loan than a fixed rate home loan because the monthly payments may change as the market conditions change. Although you can choose what type of payment to make (you have 4 choices,) you can not control the change in the interest rate you are being charged.

2.If interest rates go up significantly, you may find it difficult to make your monthly payments.

3.It may cost you more over the life of the mortgage than a fixed rate mortgage.

4.It's a more complicated and harder to understand type of loan. Some people can get confused by its characteristics.

5.The initial low rate will adjust to a rate higher than that one of a fixed rate mortgage to make up for the artificially set initial low rate.

On the other side, there are several benefits that may help you decide on getting this type of loan. It's important for you to know them before making a final decision. These are some of them:

1.You can buy a bigger house because the lower initial payments help you qualify for a more expensive home.

2.You can use the money you are saving in your monthly payments for investment reasons, to make improvements on the house or pay bills.

3.You can enjoy lower rates without refinancing.

4.You can more easily qualify for this type of loan.

Interest-only home loans are usually a good choice if you think you're going to stay in the house for many years, if the interest rates are expected to go down or if you think you will be earning a lot more money in the future.

As with any other loan, it's up to you to inform yourself of the benefits and drawbacks of this kind of mortgage. You may want to get a local mortgage broker who will guide you to the best possible type of loan depending on your individual financial circumstances.