Interest Only Mortgage Loans Florida, New York City Condos and Co-Ops!
An Interest Only loan is a loan in which, for a set term, the borrower pays only the interest portion due on the principal balance. The principal balance remains unchanged. During the entire period of the loan (including the interest only portion), the borrower has the option to make a payment toward the principal in order to reduce the principal balance and in turn reduce the monthly interest payments (automatic recast). At the end of the interest-only term, the borrower may choose to refinance to another interest only mortgage loans, pay the loan off in full, or with the help of a lender convert the loan to a principal and interest payment (or amortized) loan.
At Starr Mortgage Company, we offer a rare opportunity to get an interest only loan without any prepayment penalty or price adjustment to the rate. This is available for 3 year, 5 year, and 7 year fixed period. These loan products are available up to $5 million dollars!
What Are Interest Only Mortgage Loans?
Interest-only loans are unique because they allow borrowers to pay only the interest on the loan for a set term. During this time, no principal is paid unless the borrower opts to reduce the balance voluntarily. These loans are particularly beneficial for those who need flexibility in monthly payments or who anticipate a significant future income.
Interest Only Loans in Long Island, Rockland, Westchester and Bergen Counties!
Interest Only Loans in all of New York, New Jersey, and Florida
We proudly offer Interest Only Loans in all of New York, New Jersey, and Florida. An interest-only loan allows borrowers to enjoy lower initial payments while retaining the option to pay down the principal balance as needed.
Benefits of Interest Only Loans in Florida, New York, and New Jersey
- Flexible Monthly Payments: Borrowers pay only interest, which lowers initial monthly costs.
- Customizable Terms: Choose between 3-year, 5-year, and 7-year fixed periods.
- No Prepayment Penalty: You can pay off the loan early without additional costs.
- High Loan Amounts: Available for loans up to $5 million, ideal for high-value properties.
- Great for Investors: Ideal for property flippers or those with fluctuating annual income.
Pros & Cons of Interest-Only Mortgage Loans
| Pros | Cons |
| Lower Monthly Payments (Initial Period) – Since you’re only paying interest, your monthly payments are significantly lower than fully amortizing loans. | Higher Payments After Interest-Only Period – Once the interest-only term ends, payments increase as you start repaying the principal. This can be a financial shock if not planned for. |
| Increased Cash Flow Flexibility – Great for investors, self-employed individuals, and high-income professionals with irregular income or large bonuses. | No Equity Buildup (Unless Paid Voluntarily) – Since you’re not paying down the principal, you won’t build home equity unless the property value appreciates or you make extra payments. |
| Potential for Higher Investment Returns – Lower initial payments free up cash, allowing borrowers to invest elsewhere, such as stocks, business ventures, or additional properties. | Risk of Home Depreciation – If home values decline, you may owe more than the property’s worth, making refinancing or selling more difficult. |
| Short-Term Real Estate Strategy – Ideal for investors planning to flip properties or sell within a few years before the principal payments begin. | Interest Rate Risk (If Not Fixed) – If your loan has a variable rate, future rate hikes could make refinancing more expensive. |
| Ideal for High-Value Properties – Borrowers purchasing luxury real estate or high-cost homes can reduce upfront expenses. | Not Ideal for Long-Term Borrowers – If you plan to stay in the home long-term, a fully amortizing loan may be a better option. |
Interest Only Loans vs. Fully Amortizing Loans
The most common types of loans are called “amortizing” loans, which means each payment by the borrower pays the required interest, and a portion of the payment is used to reduce the principal balance. The word amortize is derived from the Latin ad + mors and literally means “to kill” and it refers to the fact that when you make a payment, you “kill” the loan.
An interest-only loan does not reduce the loan balance at all, but only pays the interest due. A common situation where a borrower would like to obtain an interest only loan would be if they wanted to buy a piece of property, make improvements to it, and sell it. Because most property values in New York City have been rising, these loans are very popular with real estate “flippers” – investors that buy and sell property.
Another common situation for an interest only loan would be for a borrower who receives large bonuses at the end of the year. Many people in the financial services industry who received large bonuses at year end prefer the lower monthly payments that the interest only loan offers. If they choose, they can always pay down the principal at year end. Or they can choose not to pay it down at all. The important thing is that it is YOUR choice and not the bank’s as to when and how you pay down your loan.
Real-World Example: Cost Comparison
As an example, a 1 million dollar loan at 2.875% (Fully amortized) will cost a borrower $4149, per month.
That same exact loan (1 million dollars at 2.875%), (interest only) will cost the same borrower only $2396 per month.
FAQs About Interest Only Mortgage Loans
How do Interest Only Loans work?
Borrowers pay only the interest for a set term, with the option to pay down the principal at their discretion.
Who should consider Interest Only Loans?
These loans are ideal for investors, high-income earners with variable income, or those looking for lower initial payments.
Can I refinance my Interest Only Loan?
Yes, borrowers can refinance into another interest-only loan or convert to an amortized loan.
Why Choose Starr Mortgage Company for Interest Only Loans?
At Starr Mortgage Company, we bring years of expertise in handling interest-only loans. Our team works closely with you to find the best solution for your financial needs. Whether you’re an investor, a homeowner, or a first-time buyer, we’re here to help.
Contact us today to explore the best Interest Only Mortgage Loans in Florida, New York, and New Jersey. Flexible payment options, competitive rates, and no prepayment penalties await!
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Read our new blog How Common are Interest-Only Loans in Florida?
