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Investment-Backed Mortgages

By: Jeremy Maddock, Thu Dec 8th, 2005 04:36:41 PM

Investment-backed morgages are a type of property loan where the buyer doesn't pay down the balance during the term of the contract, but instead, accumulates an investment in hopes of doing so in the future.

This type of arrangement is usually cheaper in the short term (only the interest has to be paid on a monthly basis), but higher risk in the long run. This is because there is no guarantee that the investment will be sufficient to cover the balance, at the time of maturity.

Investment-backed home morgages do offer some advantages, however, due to the fact that they are a cheaper way for buyers to take advantage of low morgage rates in an improving real estate market.

About the author: Jeremy Maddock is the webmaster of FinanceFacts.info, a useful source of finance articles.

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