Calculator UseUse this calculator to calculate your monthly payments on an interest only mortgage. You'll get the amount of the interest only payment for the interest only period. You'll also get the principal plus interest payment amount for the remaining mortgage term. Create an amortization schedule when you are done. Show
For a basic type of mortgage use this simple mortgage calculator or mortgage calculator with taxes and insurance. This interest-only mortgage calculator compares side-by-side the monthly payment for...show more instructions Mortgage rates can't get much lower! It's the perfect time to apply whether you hope to buy or refinance. Check today's best available mortage rates and see which
lenders are taking new applications: See Today's Best Available Rates → Thinking about taking an interest-only mortgage but you're not sure if it's right for you? There are many important points to consider beyond just the payment. This Interest Only Mortgage
Calculator makes it easy to compare both a fixed rate and interest only mortgage side-by-side. Simply enter the mortgage amount, mortgage interest rate, mortgage loan term, and perhaps a few of the optional variables, and you'll find your monthly principal and interest payment for each mortgage. You'll also find some helpful advice below to help you better understand interest only mortgages and how they work so you can make the right decision for your situation. . . Related: 5 Financial Planning Mistakes That Cost You Big-Time (and what to do instead!) Explained in 5 Free Video Lessons Interest-Only Mortgages Vs. Traditional MortgagesAn interest-only mortgage is a type of loan where the mortgagor is only required to make payments covering the interest, but no principal. The interest-only period for these mortgages typically lasts 5 to 10 years, after which the mortgagor will start paying principal. Traditional home mortgages have monthly payments that are allocated between the principal and interest creating amortization. Modern interest-only mortgages have no amortization unless you choose to pay more than the required monthly payment thus reducing principal. Some people prefer interest-only mortgages because it frees up cash that can be diverted to other investments. The danger, however, is you make no progress on paying for your house thus delaying the entire amortization process and increasing the total cost for your home. This Interest Only Mortgage Calculator will help you calculate how much interest should be paid monthly instead of paying both interest and principal every month. You'll find that you'll be paying less to start, but remember you'll eventually need to pay off the principal as well. Interest-Only Mortgage Pros And ConsThere are a number of benefits to an interest-only mortgage. Below are a few:
While there are benefits to keep in mind, be aware of a few downsides as well:
Consider these points carefully before signing up for an interest-only mortgage. Final ThoughtsInterest-only mortgages can work for you if you properly manage your money. But they require a lot of discipline and focus so that you won’t be tempted to spend your extra income on unnecessary things. Do your homework, shop around for the lowest rate. Complete the calculations above before making a decision. Seek advice from your financial advisor if there are some areas you are unsure of and find out if an interest-only mortgage is right for you. Interest Only Mortgage Calculator Terms & Definitions
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Next StepsMortgage rates can't get much lower! It's the perfect time to apply whether you hope to buy or refinance. Check today's best available mortage rates and see which lenders are taking new applications: See Today's Best Available Rates → Can you make extra payments on an interestYou can make overpayments on both a repayment (capital and interest) mortgage and interest-only mortgage but overpaying on an interest-only home loan doesn't give you all the same benefits. When you overpay on a repayment mortgage all of your overpayment goes towards reducing the capital loan of your mortgage.
How does Amortization work with extra payments?Even a single extra payment made each year can reduce the amount of interest and shorten the amortization, as long as the payment goes toward the principal and not the interest (make sure your lender processes the payment this way).
How many years does 2 extra mortgage payments take off?The additional amount will reduce the principal on your mortgage, as well as the total amount of interest you will pay, and the number of payments. The extra payments will allow you to pay off your remaining loan balance 3 years earlier.
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