Interest-only payments during deferment do not reduce the principal balance of the loan. After deferment, full principal and interest repayment begins and continues throughout the life of the loan. With Option 1, payments remain fixed throughout the life of the loan. Monthly payments of principal and interest for Option 2 or Option 3 will be fixed when the loan goes into repayment and will remain fixed the remaining years of the loan. If principal or principal and interest is deferred, the monthly payment amount will increase if the interest rate increases, and will be based on the interest rate applicable at repayment.
Finance charge is interest paid over the life of the loan, plus the origination fee.