Interest-Only Mortgages

C

The answer to the question is C. Interest-only mortgage.

An interest-only mortgage is a type of mortgage loan where the borrower is only required to pay the interest on the loan for a specified period, usually for the first few years of the loan. During this period, the borrower's monthly payments will be lower than they would be for a traditional mortgage loan that requires both principal and interest payments.

The principal balance on the loan remains the same during the interest-only period, and the borrower does not build any equity in the property. After the interest-only period ends, the borrower must begin paying both principal and interest on the loan, which can result in higher monthly payments.

Interest-only mortgages are typically used to finance the purchase of more expensive properties, as they allow borrowers to keep their initial monthly payments low while they are still building their income or assets. However, they can also be risky for borrowers who do not fully understand the terms of the loan or who cannot afford the higher payments once the interest-only period ends.

To sum up, an interest-only mortgage is a mortgage that requires the borrower to pay only the interest on the loan for a specified period, typically used to finance the purchase of more expensive properties.