Interest-OnlyI/O
Quick answer
An interest-only loan requires payments of interest alone for a set period, with no principal reduction during that time.
Interest-only structures lower the monthly payment by deferring principal repayment. They are common on bridge loans, construction loans, and the early years of longer-term investment property debt, where cash flow is still building or the business plan calls for a sale or refinance before amortization would matter. The trade-off is that the balance does not decline, so the full principal remains due at maturity.
Related product: Bridge Loans
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