interest-only loan


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Interest-only loan

A loan in which payment of principal is deferred and interest payments are the only current obligation.

Interest-Only Loan

A non-amortized loan. During the payment period of interest-only loans, one only pays on the interest that accumulates but not on the principal. At the end of the loan's term, the entire principal is due. An example is an interest-only mortgage, in which one makes interest payments for the term of the mortgage and then refinances in order to pay the principal at maturity.

interest-only loan

A loan on which one pays periodic interest payments without any reduction in principal,and the entire principal balance is due and payable upon maturity of the note.

References in periodicals archive ?
0 million non-recourse floating rate interest-only loan that features a 36-month term with two extension options, flexible pre-payment, and is inclusive of a facility to provide for capital expenditures, working capital, and interest and carry reserves.
Borrowers who used brokers were more likely to obtain an interest-only loan compared to those who went directly to a lender
WHEN the pressures begin to build on balancing the household budget, does it make sense to use the mortgage as a safety valve by switching to an interest-only loan to cut monthly repayments?
The self-employed, contract workers and those receiving substantial bonuses can choose to minimise their regular monthly payments with an interest-only loan and use 'peaks' of higher income to make ad hoc capital repayments.
When Lawrence Ragland was looking to expand his real estate holdings, he used funds he obtained from a cash-out option on a five-year interest-only loan.
But the interest-only loan, which stretches 35 years, fit her family's situation.
He said some borrowers were relying on interest rates peaking next year and then falling, and planned to have an interest-only loan for just two years before switching to a repayment one, while others were hoping their financial position would be better in two years' time.
This can happen if the lender or intermediary wrongly sets up the loan as interest-only when it should have been a repayment loan or if the investment planned to repay the interest-only loan is not set up.
Other popular loans included the interest-only loan (25 percent), prime adjustable loan (23 percent), the hybrid adjustable (15 percent), and the non prime loan (8 percent).
The interest-only loan is for a 3-year term and was closed within two weeks of application.
This compared favourably with Report 445's finding that more than 30% of applications reviewed showed no evidence the lender had considered whether the interest-only loan met the consumer's requirements.
The financing was structured to be a 7-year interest-only loan and was funded to 59% of value.