A Quick Definition Of The Interest Only Mortgage

The interest only mortgage is a long standing product that has been available from mortgage providers for some time. It has actually become extremely popular in recent years as a result of the high cost of living and housing prices. With an interest only mortgage, that is literally what you pay – the interest only! Your debt never gets any bigger because you are paying off the interest, but then again your debt is not getting any smaller either and this may pose a problem in later years.

The interest only mortgage was big in the 1980s and 1990s as a direct result of the popularity of endowment policies. The idea was that an endowment policy would grow and grow, covering the cost of your home, whilst you paid off the interest every month so that the whole mortgage was paid off after your selected period.

However, today the interest only mortgage is not used in conjunction with an endowment policy. It can be a useful tool in helping individuals to get on the right mortgage track though. The interest only mortgage can temporarily reduce costs and help you to get your finances in order in the early years so you can avoid debt in the later ones.