Under an interest-only mortgage loan, you pay only the interest on the mortgage in monthly payments for a fixed term. After the end of that term, usually five to seven years, you have to refinance, pay the balance in a lump sum, or start paying off the principal, in which case the payments go up.
An interest-only loan might be a good fit for someone whose income mostly is in the form of t commissions and bonuses or someone who expects to earn a lot more in a few years. It might also work for someone who is willing to make at least one or two additional yearly mortgage payments on the principal owed or who plans to sell the property within a short time.
Financial advisers do not recommend interest-only mortgages to medium wage earners who apply for moderate-size home loans and whose savings from this type of a loan would be minimal.