One of the reasons for interest-only mortgages becoming extremely popular is because of the time periods on offer for repayment of these loans. The time period of offer may vary from as little as 5 years to 30 years. Now that is almost half of your lifetime. You will definitely feel confident about repaying your loan, in three decades time. Although it may sound easy, you still have to consider a lot of factors before going in for any long-term repayment option.
Now as we have seen 30 years is a pretty long repayment period. But anything could happen in these 30 years. You may be tempted to purchase a house after getting a loan with a 30 year repayment term. Although long-term repayment options are good, they have their own risk factors. Three decades down the line, you may have lost your job! There is also the possibility that you will be tempted to buy another house which has caught your fancy, say 10 years down the line. In this case, what do you do with your present home? There are lots of questions which need to be answered, before going in for a long term loan.
Generally speaking, long term repayments loans are ideally suited for young executives who are on the threshold of their careers. They have dreams in their eyes and a spring in their step. They are confident that they would repay the entire amount in the specified time. They could go in for loans with a 30 year repayment term. By the time they reach the peak of their career, they would have repaid the entire or a substantial amount of the loan and most of them would be ready for a blissful retired life. Long term repayment loans are also suited for business persons and the rich. They could always invest the loan amount into other ventures and repay the interest from the profits earned. Whatever may be the pros and cons, it is better to go in for a long term repayment loan, in consultation with your financial advisor.