Which one of the following terms is used to describe a loan that calls for periodic interest payments and a lump sum principal payment? – 2017

which one of the following terms is used to describe a loan that calls for periodic interest payments and a lump sum principal payment?



interest-only loan




The borrower only pays the interest on the mortgage through monthly payments for a term that is fixed on an interest-only mortgage loan. The term is usually between 5 and 7 years. After the term is over, many refinance their homes, make a lump sum payment, or they begin paying off the principal of the loan.




What does interest only?
An interest-only mortgage gives you cheaper monthly payments on your home loan but you are not actually paying back any debt. At the end of the mortgage term you will still owe your lender the amount that you borrowed, and now you need to have plans to repay this at the start of the loan.

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