In an Interest-Only Loan, when is the principal repaid?

In an Interest-Only Loan, the principal is repaid at the end of the loan term. During the life of this type of loan, the borrower is only responsible for paying interest on the loan balance, meaning that the principal amount remains unchanged until the loan matures. This structure allows for lower initial payments, as the borrower is not paying down the principal. At the conclusion of the loan period, the total principal is due in a lump sum, which is when the borrower must repay the full amount that was initially borrowed. This arrangement can be advantageous for borrowers who expect to have the funds available or plan to refinance before the principal payment is due.