New Launch - India Real Estate Report 2026.

What is Interest-Only Loan?

Interest-Only Loan is a loan where borrowers pay only the interest amount for a specific period before starting repayment of the principal amount.

How Interest-Only Loans Work

  • Lower monthly payments during the initial phase
  • Principal repayment begins later in the loan term
  • Common in investment and commercial real estate
  • May involve higher future repayment obligations

Benefits and Risks for Borrowers

  • Improves short-term cash flow flexibility
  • Helps investors manage temporary financial needs
  • Total loan cost may increase over time
  • Requires careful long-term repayment planning

Interest-only loans can provide temporary financial relief and flexibility, but borrowers should understand the future repayment risks before choosing this financing option.

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