If you compare home loans, you can certainly find that interest only mortgage loan is one of the mortgage loans, which can help you in reducing your monthly installments. It is because, in this case, you do not have to repay the principal for this kind of loan. However, there are certain pros and cons associated with the interest only mortgage loan. You must get into these factors before starting with this loan.

Pros: the interest only mortgage loan can enable you in reducing your monthly repayments. If you do not have any fixed salary, you can easily opt for this loan, as you have to pay only the interest. Moreover, the interest only mortgage loan helps you to customize the schedule of amortization. It allows you to purchase costly house with low monthly payments, and enables you to use your savings for other purposes. You can easily pay off the interest without feeling exhaustive and frustrated.

Cons: interest only mortgage loan do not accumulate the equity for your house. As a result, you can be forced to sell your own house or refinance it for paying off the interest only mortgage loan. Moreover, this loan does not allow you build up any equity with which you can borrow in the future for a second mortgage loan. Since you are paying only the interest, the balance of the loan does not decrease; rather it will force you to carry out debt servicing in order to pay the required interest. Furthermore, you will be forced to write a cheque in order to sell your property once it loses its value.