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Interest-only second mortgages differ from traditional second mortgages.

Interest-only second mortgages have a certain period of time when monthly payments are based solely on the interest accrued on the loan.The period of time in which interest-only payments are allowed is established by either the borrower or the lender. The interest-only period is usually between one and five years.When the period of interest-only finishes the loan converts to traditional second mortgage.

Interest-only second mortgages is beneficial to people who are planning to sell their home. They can take a second mortgage, make necessary improvements to the home, then sell it and earn the money to pay back both of their mortgages.

Borrowers who are considering entering into an interest-only second mortgage should keep in mind that their monthly payments will be higher after the interest-only term than it would be on a traditional second mortgage.