Interest-only loans allow you to delay repayment of principal for 10 years, which may provide significant savings if you are planning to re-sell your home at the end of the interest-only period.
There are two types of Interest-only loans: Fixed-rate and Adjustable Rate. Both types can be used for primary residences and second homes, but their rates and terms differ.
Fixed-rate: At the end of the initial 10 years, loans amortize for the remaining term to include principal and interest. As a result, payments will increase.
Adjustable Rate: Rates may adjust after the initial fixed-rate period, which could lead to higher monthly payments in the future; however, principal payments will not be required until the eleventh year.
Navy Federal offers two main types of conventional mortgages on second homes.
Exceptions are in Alaska and Hawaii, where conforming mortgages go up to $625,500. Down payment required for conforming second home mortgages.
These loans are for investment properties. The loans are granted to individuals only-not available in the name of limited liability companies, partnerships or corporations.