Question 1

What happens when the interest-only period ends?

Accepted Answer

Your payment increases to cover principal and interest over the remaining term. A 30-year loan with 10-year I-O period amortizes over the final 20 years, raising monthly costs 30-40%.

Question 2

Can I refinance before the I-O period ends?

Accepted Answer

Yes, most borrowers refinance within 5-7 years. You'll need sufficient equity and qualifying income. Rates vary by borrower profile and market conditions.

Question 3

Do I build any equity with interest-only payments?

Accepted Answer

Only through appreciation, not payments. You owe the same principal after 10 years unless you prepay. Del Mar's appreciation history makes this strategy viable for many.

Question 4

Are interest-only loans available for investment properties in Del Mar?

Accepted Answer

Yes, we place I-O loans on investment properties regularly. Expect 25-35% down and reserves covering 12-24 months of the fully amortizing payment amount.

Question 5

How much lower are interest-only payments initially?

Accepted Answer

About 25-35% lower than principal-and-interest payments. A $2M loan saves roughly $3,800 monthly during the I-O period but costs more in total interest over the loan life.

Interest-Only Loans in Del Mar: Strategic Financing for Coastal Properties