Interest-only Mortgage

An interest-only mortgage has a minimum payment option that is "interest only." Making the minimum payment on an interest only mortgage is only the amount required to pay down the interest every month. Any money payed on top of the interest is "principal" and goes to reduce the balance.

If you are an investor, or have other valid use for a lower initial payment, this mortgage option may be for you. If you are payed on commission, and may have months where you do not recieve your usual pay, having an option to pay a reduced mortgage payment can be a lifesaver.

You should ask yourself whether you are disciplined enough to make the larger payment when you are not obligated to do so.