Interest-Only Loan

An interest-only loan allows borrowers to pay only interest for an initial period. Principal repayment begins after the interest-only phase ends.

These loans can lower early payments but may lead to higher payments later. They are common in certain mortgages and investment financing.

Related Terms

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Interest is the cost of borrowing money or the return earned on deposited funds, typically expressed...

Principal is the original amount of money borrowed in a loan or the original amount invested. It doe...

Amortization is the process of paying off debt through regular payments over time. Each payment cove...

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