From what I understand about mortgages, which isn’t a lot at all, I just don’t see any scenario where an interest only mortgage is a good idea.
You pay it off for let’s say 20 years and you still have the full balance remaining. What am I missing?
In: Economics
From an economic perspective you should always invest as much as possible to make your money grow. But you do want to live in a house so you take out a mortgage. But if the interest is lower than what you expect to earn from your money investing, you would rather spend as much money as possible investing and as little as possible paying back.
In recent years it was possible to get mortgages with 0.5% interest locked for 30 years. In that case it makes perfect sense to focus on investing your money, rather than “tying them up in bricks”. When the 30 years are up, you pay out the mortgage with the money you earned investing and keep the rest.
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