The interest only mortgage is the idea of paying only the interest rate for the mortgage. When you are strapped for finances due to your job, and you can't really pay for the interest and principal amount, you might want to consider this option first. Since you are paying only the interest of the mortgage, you can save yourself some money from possible problems altogether. You are already taking care of the interest but leaving the principal amount alone.
This option is good for those who want to have a home but are unable to do so because of their financial situation. For example, you can opt for this type of mortgage if you already have a job but you are still studying for post graduate courses. Since you can not pay for the tuition and mortgage altogether, you can pay only the interest of the mortgage and the tuition of your school with your job, and this will allow you to finish school at the same time. You're confident that someday you can pay for this because the result of the postgraduate courses means you'll have better opportunities and higher paying jobs. After you've landed a job after your graduation, you can start paying not only the mortgage, but the principal amount as well.
The idea that something will come along is really risky. You can not really project that you will earn more money in the future. You might consider an inheritance as your guarantee but it's still a risk. After all, interest only mortgages will still require you to pay for the principal amount on the required repayment date. If you can't make it, the bank or mortgage firm will still get your house even if you pay them with the interest for many, many years.
So when you are paying interest only mortgages, start saving some money to pay for the principal amount. Even though you may only be earning a small amount, for sure there's always something that you can save so that you can pay a little each month. Chipping the principal amount slowly is better than nothing at all. As soon as you have the money to pay at least the monthly requirement of your lending company, give it to them. This could be a smart move as you only pay when you have the money. The fact that you are still paying your interest only mortgage guarantees that you are still interested in paying the mortgage in the right time before its payment term ends.
On the other hand, mortgage only payments is an ideal type of mortgage if you are interested in a house but you can't really stay there forever. The mortgage would only be some sort of rent to your home. As soon as you need to transfer, you can sell your house to pay for the property. You really don't get anything in this transaction except if the market value of your house really goes up.
Interest only mortgages are a great idea but too risky if you are interested in purchasing the home by the agreed repayment date. Always think twice before you go with this transaction payment plan.
Imran is writer and webmaster for http://www.1mortgagesuk.co.uk For more information on interest only mortgages or any other type of mortgage information and enquiry, please visit us.
http://ezinearticles.com/?Is-An-Interest-Only-Mortgage-Really-Helpful-For-Your-Needs&id=674674
