Loans with interest-only payments typically have lower monthly payments than loans with regular payments. This is due to the fact that ordinary loans frequently carry interest fees in addition to a portion of the loan total. “Amortization” is the process of gradually paying off debt while prioritising interest payments.
Interest-only payments are not permanent. Depending on the conditions of the loan, you have a few options for repaying the remaining balance:
After a certain period of time, the loan becomes an amortizing loan with increasing monthly payments. Each payment includes both principle and interest.
At the conclusion of the interest-only period, you make a sizable balloon payment.
You refinance the loan and obtain a new loan to pay it off.
