A “no payment mortgage” is a type of mortgage product where the borrower does not make any regular mortgage payments during a specific period, usually ranging from 6 months to several years. Instead, the interest charges and any other fees are added to the principal balance of the mortgage.
While a no payment mortgage can be appealing for some borrowers, it’s important to understand that interest charges and fees continue to accrue during the payment-free period, which means the overall cost of the mortgage will be higher. In addition, at the end of the payment-free period, the borrower will have a higher mortgage balance, which means higher monthly payments going forward.
It’s also important to note that no payment mortgages are not very common and may come with stricter requirements, such as higher down payments or more extensive credit checks. Borrowers should carefully consider all the risks and consequences before choosing this type of mortgage product.
It’s always a good idea to work with a licensed mortgage broker and seek professional financial advice to explore all available options and find the best mortgage product to suit your needs and financial situation.