We were talking about such loans in one lecture, but in detail, we discussed interest-only mortgages. I have some notes on it and will write the info I have here; maybe, for someone, it will be interesting and informative.
The term "interest-only mortgage" (IO mortgage) refers to a house loan that enables you to pay only the interest for a specific time frame. After that time, you have three options: refinance, make a lump sum payment for the remaining balance, or start making regular monthly payments. The advantage of an interest-only mortgage is that you can make minimal monthly payments for the first few years you own the house. However, there are several disadvantages, and interest-only mortgages are regarded as risky. Here is all the information you require on how they operate and how to be eligible.
Such a loan type has both pros and cons.
- monthly payments are usually lower
- rates may be lower as well
- can help you to buy a better and more expensive home
- low payments are temporary
- rates can go up
- existing equity gained from the payment can be lost
It's hard to say whether such a loan is good or bad, it's up to a person to decide.
Also, when I was looking for some additional information on that topic, I came across this article https://fitmymoney.com/how-to-pay-your-mortgage-with-a-credit-card/ which is also dedicated to paying off mortgages, but with a credit card. I've never had it and never paid it off with cash or a card, but that information is pretty interesting and useful. There are aslo descriptions of cars, and one of them offers bonuses for the sum you pay off. Maybe, it's also financially beneficial, and I just need to learn more detail