What is interest-only loan?
Payments cover interest alone, so the principal balance does not decline during the interest-only period. If no amortization occurs before maturity, the original principal is due as a balloon.
Where you will use it: this term comes up in the Real Estate Finance course, and the full course glossary collects every term in one place.
Related terms
From the free Real Estate Finance course by Devon Coombs, CPA, MBA.