What’s the difference between Interest Only and Principle and Interest payments?
Interest Only payments are when you just pay the interest on the loan, you don’t reduce the amount that you owe. The balance remains the same. Generally the amount of the payment required per month is less than if you where paying the loan balance down. This helps cash flow. Usually, banks will only allow you to pay interest only for a limited amount of years, not the full 30.
Principle and Interest payments are where your paying the interest on the loan and paying the loan balance down. You are actually paying the loan off over time! This creates equity!
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Disclaimer: Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.