|
These type of loans are common in the US, they especially were when the interest rate was a bit higher. They are referred to as buy-down loans.
In the nineties I was looking for a house in a development. The interest rate was 9% (I think). The developer offered a 3-2-1 buy down, so the interest for the first year would be 9-3=6%, 9-2=7% for the second, 9-1=8% for the third, there 9% there after.
This type of loan served two purposes, in addition to being a marketing strategy.
1. You would qualify for the loan base on the initial payments (1st year).
2. Most have higher expenses the first couple of years as thy also are buying furniture, plus most assumed that they would be making more 1, 2 and 3 years later.
|