Interest only mortgages are mortgages where you only pay the interest every month. This means you aren’t paying off any of the principal that you borrowed initially. This usually lasts for a set amount of time. After this “introductory” period you’ll be required to either pay off the loan, refinance or start making larger payments to cover both interest and principal.

These types of mortgages do work well for certain circumstances. For example, if you are definite that your income will be going up in the near future, an interest only mortgage will allow you to afford more house before the raise. Or it can work if you already have a large amount of equity in your home and want to refinance with an interest only loan to use the money for other, more profitable investments. Finally, if you have an irregular source of income, like commissions or seasonal work, you can make the income only payments during slow times and larger payments during larger income times.

The troubles with interest only mortgages are many though. You may end up paying way more in the long run because you aren’t paying off any of the principal. Or you may experience payment shock, where your payments rise as much as two or three times after your introductory period.

Beyond that, you aren’t really building any equity in your home with an interest only mortgage so it doesn’t really make sense to take out this kind of loan except in certain circumstances. Often times, if you take out a interest only loan you’ll find yourself scrambling to pay off the loan or refinance or even possibly losing your home in the end. Whichever type of mortgage you decide on, make sure it is the right choice for your needs and that you’ll be able to pay it off on schedule.