Disadvantages of interest only mortgages
Of course, there is a downside to interest only mortgages.
One has to remember that interest only mortgages do not cover the principal amount borrowed. That means that after the mortgage period ends, the borrower has to pay off the large amount that is the principal. Interest only mortgages normally last anywhere from 5 to 10 years, after which large payments are required.
The biggest disadvantage then, is the risk. For some people, they are expecting some sort of financial windfall, like an inheritance, in the future. For them, the risk is not big. For those who are not in that position, however, they risk losing their home if they cannot afford to pay off the principal at the end of the interest only mortgage period.