
An Interest-Only LIBOR loan is not for everyone. Your interest rate can increase and monthly payments can increase every one or six months, depending on the index you choose. Additionally, your monthly payments will generally increase when the interest-only period ends because you will be repaying principal and interest over the remaining loan term. On a six-month LIBOR, if you prepay principal during the first ten years, your required monthly payment may include some principal until your next six month adjustment.