Best answer from question by homeless:
Answer by sheila m
Hi I am a mortgage consultant, an interest only loan is always charged at a higher interest rate than a principal and interest loan, and if you are paying interest only then you are not paying anything off the purchase price of the property, there are lots of opportunities at the moment for better mortgage deals, if you are located in Australia then contact me and I will give you free advice. shemay1@yahoo.com
Best answer from question by ronnieD:
Answer by Miss Emily
Every loan has an APR, what people refer to as “bad” is an ARM (adjustable rate mortgage).
An interest only loan is usually amoritized over 30yrs. But yes, you are just paying interest only & NOT paying anything towards your principal. If after 30yrs. of paying Just the interest on say a $ 100K loan,,,, after 30yrs. you would still owe $ 100K, at which time you would sell the home or just refinance. Most people do not pay interest only on the same loan for 30yrs.
If you have an interest only loan, it is because you couldn’t afford to pay the principal as well when you first got the loan. You should contact the bank who holds your mortgage note & ask if you have a “pre-payment” penalty OR if it would be OK to make some payments towards your principal.
If you’re currently on an adjustable rate interest only loan, it would be better & safer to refinance to a fixed loan payment. Even if it is interest only, just make sure you ARE able to, if you want, to make extra payments towards principal.