Interest Only Loans Sample Clauses

The Interest-Only Loans clause defines the terms under which a borrower is required to pay only the interest on a loan for a specified initial period, without reducing the principal balance. During this interest-only period, monthly payments are lower since they do not include any principal repayment, and after the period ends, payments typically increase to cover both principal and interest. This clause is commonly used in real estate or commercial lending to provide borrowers with greater cash flow flexibility in the early years of a loan, addressing the need for lower initial payments before full amortization begins.