Hawaii interest-only mortgages are mortgages in which the monthly payments only cover the interest. The interest-only mortgage is not truly a mortgage, but rather a five- or ten-year plan with the purpose of having the lowest possible monthly payments. The principal itself is not touched at all in this type of payment plan.

What happens to the principal at the end of the payment term? It must be paid off. This is the lender's expectation on interest-only mortgages, and one on which the buyer must be prepared to follow through. Thus, these types of lending plans are best suited for those borrowers who are financially equipped to honor their terms.

Who Benefits from Hawaii Interest-Only Mortgages?

The appropriate borrower for Hawaii interest-only mortgages may fall under one of several profiles. Typically, this includes
1. a borrower with a large income,
2. a borrower who expects a large income,
3. a borrower with infrequent income in the form of commissions or bonuses, or
4. a borrower with a sound investment strategy for the savings that this plan will provide.

In all of these cases, there should be no obstacle to paying off the principal once the term is up. On the other hand, interest-only mortgages can be a very poor choice for moderate- or low-income wage earners. This underscores the importance of always knowing what kind of mortgage plan is best for one's particular situation. Reputable Hawaiian-based brokers and lending institutions can help prospective buyers find the right mortgage package, whether it's an interest-only mortgage or another type of plan, such as the more traditional fixed-rate mortgage.