Interest Only or "I/O"

Certain commercial mortgages may be available as I/O or “interest only” loans. These are loans in which the borrower only makes payments on the interest of the loan for a set period of time, starting at the beginning of the loan’s term.

During that period, the borrower does not need to make payments on the principal amount. After the set time period has elapsed, the loan is amortized to require payment on both the principal and interest.

I/O loans have pros, cons, and risks. New business owners may find them appealing as they look to get their businesses off the ground, since the have lower payments up front. But depending on the amount of capital borrowed, the risk of default is high: Monthly payments become considerably larger once the interest only payment period ends, since none of the principal balance has been paid down yet.

A select number of lenders in the InvestmentProperty.loans network offer I/O mortgages (typically for bridge loans or other short-term loans of 5 years or less). If you’re seeking an I/O lender, our experts will make sure you are connected to a mortgage that meets the unique needs of your investment property.