That's why it's helpful to have a tool like this interest-only mortgage calculator. Eventually, those loan principle payments are going to come due with a potentially big increase in monthly mortgage payments, and you have to be prepared for them.
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Someone for whom an interest-only mortgage might not be a good choice? A first-time homebuyer who can't afford a full house payment or a repeat buyer trying to stretch their money to buy a more expensive home than they can really afford. Financially sophisticated borrowers who would rather invest their money elsewhere rather than building home equity.A young person with a limited income now, but who has a high degree of confidence they will be earning much more in the near future, such as a medical student.A borrower with an irregular income, such as from a seasonal business, so they wish to be able to minimize payments when they wish, then make payments against loan principle when they are able to.Someone who only plans to stay in the home a few years before moving on, so they don't want to tie up a lot of money in a mortgage.Here are some examples of the type of borrower who might benefit from an interest-only mortage:
But you do have to begin making payments against principle eventually, so you need to plan accordingly. By requiring only minimal monthly payments, they're a good choice for borrowers who don't want to tie up a lot of money in a mortgage or for borrowers who want the flexibility to pay more or less each month as their finances allow. Interest-only mortgages offer some significant advantages for the right kind of borrower. An interest-only calculator like this one can help you predict what those payments will be. However, after a certain length of time, often 5-10 years, you do have to begin paying down the balance on the loan. You don't have to make any payments against the loan principle, at least not initially. About interest-only mortgagesĪs the name indicates, an interest-only mortgage is one where you only pay the interest charges. This will include the projected increase during the amortization phase of the mortgage, as you begin paying down the loan principal. Then, click View Report to see how your repayment plan will look throughout the duration of your mortgage. When you click Calculate, you will see what your monthly payments will be during the initial, interest-only phase of the loan.
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How to use the Interest-Only Mortgage Calculator Using the interest-only calculator on this page, you'll get a fair idea of what to expect monthly. It is possible to know how much you'll be paying at any point in these two phases. Once that phase elapses, you begin to bear the cost of the loan principal. You are only required to take care of the interest during the initial phase in an interest-only loan. It depends on which point in the amortization schedule you currently are at. ICB Solutions | NMLS #491986 ( Close Modal Mortgage products are not offered directly on the website and if you are connected to a lender through, specific terms and conditions from that lender will apply.
will not charge, seek or accept fees of any kind from you. By submitting your information you agree Mortgage Research Center can provide your information to one of these companies, who will then contact you. For a full list of these companies click here. If you submit your information on this site, one or more of these companies will contact you with additional information regarding your request. ICB Solutions and Mortgage Research Center receive compensation for providing marketing services to a select group of companies involved in helping consumers find, buy or refinance homes. Neither, Mortgage Research Center nor ICB Solutions are endorsed by, sponsored by or affiliated with any government agency. ICB Solutions partners with a private company, Mortgage Research Center, LLC, (nmls # 1907), that provides mortgage information and connects homebuyers with lenders. is a product of ICB Solutions, a division of Neighbors Bank.
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