interest-only loan

(redirected from Interest-Only Loans)

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 ?
BANKING AND CREDIT NEWS-June 12, 2019--Australian banks to face stricter capital rules when issuing interest-only loans
M2 EQUITYBITES-June 12, 2019--Australian banks to face stricter capital rules when issuing interest-only loans
Global Banking News-June 12, 2019--Australian banks to face stricter capital rules when issuing interest-only loans
Announced in April 2017, the review was a targeted industry surveillance examining whether lenders and mortgage brokers are inappropriately recommending more expensive interest-only loans.
In the next eight years, 1.04 million interest-only loans without repayment plans will mature.
In the next eight years, 1.04million interest-only loans without repayment plans will mature.
But DeAnne Julius - a founder member of the Bank of England's Monetary Policy Committee - doesn't agree and argues that interest-only loans can "make sense for certain people at certain times in their lives".
It also states that first-time buyers, who face some of the most acute affordability problems, are less likely than other borrowers to take out interest-only loans (17% of first-time buyers choose an interest-only mortgage, compared with 25% of home movers).
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. Interest-only loans allow buyers to lower their mortgage payments by paying the interest on the loan for a period of three, five, seven, or 10 years.
MyMortgageDirect said increasing numbers of borrowers had started taking out interest-only loans following recent rises in the Bank of England base rate, but the majority did not have an investment policy to pay off the loan.
"We also offer interest-only loans and bridge loans, which help homeowners close on a new home even if their existing residence has not yet been sold."
Global Banking News-May 31, 2017--Teachers Mutual Bank makes changes to interest-only loans