In the interest-only loan, the borrower is required to pay the interest for some part of the term with an unchanged principal balance. These loans result in delaying the repayment associated with the borrowed amount in a fixed term that ranges from 3 to 5 years. In this time period, you are required to pay only the interest calculated on the loan and not the amount of principal. At the end of the term of the interest-only loan, the loan type will be switched to the principal and loan type, which will require repaying the borrowed amount.