Question:

Are there interest only home equity loans?

Answer:

Interest only home equity loans can be a great deal. They give you the option to only pay interest for limited time. At the same time, if you want to make payments towards the principal, you should be allowed to do it without prepayment penalties.

Why take interest only home equity loans?

Interest only loans are convenient when you have a higher return investment to put your money in. Instead of spending all your free cash on home loan payments, you could use some of it with different purpose. Also, if you are not staying in your home for more years than the interest only period, you don't need to pay principal.

For home equity loans, the interest only period is usually 5 or 10 years. Interest only home equity lines of credit usually have an interest only period for no more than 5 years, due to the nature of the loan.

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