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For those seeking an affordable way to purchase a house, exploring interest-only mortgages can be advantageous. This mortgage option allows buyers to defer payments on the principal amount during the initial years after buying a home. Homeowners only need to cover the interest charges during this period. At Atlantic Mortgage & Finance Corp, we provide information and assistance on interest-only mortgages to help you make informed decisions about your home purchase.

What is an Interest-Only Home Loan?

An interest-only home loan is a mortgage that, during a predetermined initial phase, requires the borrower to pay solely the interest on the loan amount, without any contribution to the principal reduction. This phase usually lasts between 5 to 10 years. Following the interest-only term, the mortgage transitions to a traditional amortizing loan, incorporating both principal and interest in the payments, which typically leads to higher monthly dues.

The primary benefit of an interest-only mortgage lies in the reduced monthly outlay during the interest-only duration, rendering it appealing for those looking for minimized upfront costs. Nonetheless, since the principal isn’t tackled in this phase, the total cost of the loan can end up being more expensive in comparison to standard mortgages that commence principal payments immediately.

Interest-only loans are best suited for borrowers who expect an increase in future earnings, intend to sell or refinance the property prior to the conclusion of the interest-only period, or those with fluctuating incomes who appreciate the flexibility in payments. They are frequently favored by investors and homeowners who value effective cash flow management and the importance of short-term savings over the eventual total expense of the loan.

How Do Interest-Only Home Loans Work?

Interest-Only Period: In the initial phase of the loan, your monthly payments are significantly lower since you are only required to pay the interest charges on your mortgage. This period typically lasts for 5 to 10 years, depending on the loan terms.

Transition to Principal and Interest Payments: After the interest-only period concludes, the loan converts to a traditional amortizing loan. This means your payments will increase, as they will now include both principal and interest components, to ensure the loan is fully repaid by the end of the term.

Recalculation of Payments: When the loan shifts from interest-only payments to including principal, your monthly payments are recalculated based on the remaining loan balance and term. This adjustment ensures the loan will be paid off within the original loan period.

Who Can Benefit From a Interest-Only Home Loan?

  • Investors aiming to reduce monthly costs with the strategy of selling the property at a profit before the end of the interest-only term.
  • Homeowners anticipating a considerable rise in future earnings, making the prospect of higher payments later more feasible.
  • Borrowers seeking the flexibility of lower initial monthly payments, allowing them to direct funds towards other investments or financial obligations.

How to Qualify For a Interest-Only Home Loan

  • Initial Consultation: Discuss your property goals and financial situation with our experts.
  • Document Submission: Provide necessary personal and financial documents for review.
  • Loan Processing and Review: We process your application, assessing it against our Foreign National loan criteria.
  • Finalization and Closing: Once approved, we assist you in finalizing the loan and closing the deal.

Contact us to learn more or get started today!

Why Choose Us?

With our extensive 20 plus years of experience in mortgage financing, we excel in delivering financing options tailored to suit our customers’ needs. Discover why people love working with us by exploring our outstanding reviews.

By collaborating with a wide range of investors and lenders, we proudly offer a diverse range of loan programs. Our utmost aim is to provide borrowers with the most optimal financing solutions available.