A loan of interest-only is a loan in which an overall limit the borrower pays only the interest on the capital; to have of the remainders of capital. At the end of the limit which the borrower can the mortgage replace interest-only, refund the capital, or (with some lenders) convert the loan into the main thing and the loan of payment of the interests to its option. It is advisable to note that some mortgages of interest-only in Canada make it possible to the borrower to pay the interest-only, the main thing and the interest, or the even main thing and interest plus 20% additional.

In the United States, one period of interest-only of five or ten years is typical. After this time, principal balance is deadened for the remaining limit. In other words, if a borrower had a thirty years mortgage and the first ten years were interest only, after the first ten years, principal balance would be deadened during the remaining period or twenty years. The practical result is that refundings early (during the time of interest-only) are appreciably lower than posterior refundings. This allows a borrower who intends to appreciably increase their wages above the course of the loan to borrow more than they could differently have had the means. The loans of interest only were popular in the Twenties due to the economic reduction and the lack of work for the average person, there were much of preclusions during the great depression from the Thirties.

The loans of Interest-only are popular manners to borrow the money to buy capital it is not very likely to depreciate that many and who can be sold at the end of the loan to refund the capital. For example, second homes, or properties bought to leave with others. In the United Kingdom in the Eighties and the Nineties a popular manner to buy a house was to combine a loan of interest-only with an investment on the stock market, the combination being known like mortgages equipment. The rout of money market of the Nineties late showed that this was a play. A mortgage of interest-only in Canada can be combined with the obligations of company in a mode (RRSP) where the support of plan arouses a reserve of taxes, a carryforward of the tax, and a made up interest.