Interest-only mortgages are calculated differently than traditional monthly payment mortgages. With an interest-only mortgage, the monthly payments made by the borrower only go towards the interest accruing on the loan. This means that the entire loan amount is not paid down each month. Because of this, the interest-only mortgage typically has a lower monthly payment than a traditional mortgage. nnHowever, at the end of the loan term, the borrower still owes the entire loan amount. For this reason, interest-only mortgages are often used as a short-term financing solution. When used in this way, they can help borrowers to qualify for a larger loan than they would otherwise be able to afford. Interest-only mortgages can also be a good choice for investors who are holding property for a short period of time and are not concerned with building equity.