Every home buyer is faced with a question, whether it’s a first home loan or a mortgage on a luxury property: “Which mortgage product is right for me?” For traditional and jumbo loans alike, a 30-year fixed rate is one of the most popular options, paying down the principal amount and interest into one payment.
However, that’s not the only option for home buyers. Did you know it’s possible to take a 10-year hiatus from making principal payments with interest-only loans? MBANC offers a 10-year Interest-Only mortgage where you literally pay only the interest.
While it isn’t new to the market, a mortgage with an interest-only period has been hard to find until now. Yet, it’s an excellent way to put your money to work in a non-traditional way. Here are three benefits of a 10-year Interest-Only mortgage with MBANC.
Use principal to yield a higher rate of return
If you’ve ever dreamed about how you’d invest your money if you didn’t have to make monthly mortgage payments, an interest-only mortgage may pique your interest (pardon the pun). A substantial portion of your mortgage payment goes directly to the principal balance with today’s interest rates. Over any period of time, it adds up to thousands upon thousands of dollars that are locked into your home equity.
An interest-only mortgage opens up a world of opportunities to invest. With payments drastically reduced, it’s feasible to invest the money that would otherwise go to principal. Whether it’s in real estate, stocks, or a new business venture, it’s simple to achieve a higher rate of return than the interest you’re paying on the mortgage.
An option in lieu of renting
For some homeowners, getting free and clear of the mortgage lender is a lifelong dream. But owning your home outright isn’t the only way to financial freedom, which is why around 40% of Americans rent instead of mortgage a home. With an interest-only mortgage, you can get the best of both worlds.
The average homeowner in the US keeps their home for 13 years before moving and remortgaging. Consider this: what if you secured an interest-only mortgage, paid only the interest for the first 10 years, then started the process all over? For some, it could make financial sense to never invest more than just a down payment into a home. As a side benefit, you build some equity in the property while you’re making minimum payments through market increases alone.
The mortgage interest might be tax-deductible
Savvy investors already know that mortgage interest is fully tax-deductible on primary residences under $750,000. That means if all you’re paying on your mortgage is the interest for 10 years, your mortgage payments are 100% tax-deductible. That’s something to seriously consider. Would that begin to influence your decision to try paying down your loan amount quickly rather than delaying the principal payments as long as possible?
MBANC offers 10-year Interest-Only mortgages
Whether you’re refinancing or getting pre-approved for a home purchase, why not look into a 10-year Interest-Only mortgage with MBANC? Our knowledgeable mortgage analysts can help guide you to the right products and services for your needs. Contact MBANC today to find out more about innovative products that can help you achieve your financial goals.