Deferred Interest Mortgage


A lot of potential home buyers believe there are only a few kinds of mortgage plans, but you should be happy to know there are a variety of home loan types and ways to go about financing the purchase of a property. One kind of mortgage that may be best suited to your budgeting needs and savings goals is the deferred interest mortgage plan.

A deferred interest mortgage may also be known as a graduated payment mortgage. It allows you to make monthly mortgage payments below the actual total amount of interest due.

How Deferred Interest Mortgages Work

Let’s say you have a mortgage loan of $200,000 and you decide to get a deferred interest mortgage loan for it. If the monthly interest comes to $500, for example, and your deferred interest mortgage plan allows you to make a payment of $400, then you now still owe $100 in interest for that month. With a deferred interest mortgage payment, the $100 you owe will be added to the principal of the loan. So at the end of that first month, the balance of your initial loan is now $100,100.

Who Should Make Deferred Interest Payments?

Most experts agree that you should only try to get a deferred interest mortgage payment plan if you really have to. One scenario that could justify this types of mortgage is if you’re buying a new house but have yet to sell your old one. This way you can get a bigger loan and keep costs down in the short run.

Save for Your Future



To learn more about deferred interest mortgage payments and other types of mortgage loans, be sure to consult with your financial advisor or a trusted bank representative. He or she will be glad to go over all the many kinds of mortgages available so you that you can determine which is the best one for you.

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GOBankingRates Staff

These articles are written by the in-house GOBankingRates team.

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