Interest-only second mortgages differ from traditional second mortgages in that they do not require fully-amortized payments for the entirety of their term. 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.

However, after the period of interest-only payments, the loan converts to a traditional second mortgage. The borrower is then responsible for fully-amortized payments for the remainder of the loan