The terms of the loan agreement.

On the other hand, they also can pose some risk. The risk generally involves not being able to pay the full monthly amount once the financing becomes fully amortized. This is sometimes referred to a payment shock, and hits the borrower after the time of a home loan with interest only is over and payments may dramatically increase. Payment shock on a home loan with interest only can be especially significant if the borrower has not paid anything toward the amount principle during the interest-only period of the loan. Furthermore, some home loans with interest only carry significant early payoff fees. Therefore, if this is a consideration, be sure to understand fully the terms of the loan agreement.