A customer pays interest only payments for the first three, five, seven, or ten years of the loan. During the Interest Only period, the loan will be re-amortized at the remaining principal balance each month, allowing the customer to benefit from any principal curtailments made during the interest only timeframe.
After the fixed interest only period, the loan payments become fully amortized payments of both Principle and Interest for the remaining term. During this time, the interest rate adjusts every year, based on the one-year LIBOR index plus a margin.