The Flexibility Of A Fixed Rate Interest Only Mortgage

2007-11-09 05:11:17

( Financial )



If you are planning to take out a mortgage, you may want to consider the fixed rate interest only mortgage. With interest only mortgage, you would only have to pay for the interest within a certain period of time. You can use this initial period to accumulate more assets because after this time, you will start repaying the principal amount together with the current interest only mortgage rates.

With fixed rate interest only mortgage, you get a flexible repayment method and a stable fixed interest rates throughout the life of your interest only mortgage. A fixed rate interest only mortgage is especially advantageous if you have a tight budget for home purchase, or you need your money for other financial concerns. A fixed rate interest only mortgage is also a good method when you want to refinance your existing mortgage carrying an adjustable rate.

Some might dissuade you from getting interest only mortgage because you cannot accumulate home equity with this type of loan. Accumulating equity from your home does not necessarily come from paying down part of the principal amount. When property value appreciates, you would still be able to accumulate equity even if you choose fixed rate interest only mortgages.

A lower monthly payment in your fixed rate interest only mortgage would make you more prepared for some unexpected circumstances such as sudden medical expenses due to unforeseen illness, or accident. To calculate how much you can save when you opt for fixed rate interest only mortgage, you may want to use the interest only mortgage loan calculator available in a number of websites.

To maximize that benefits that fixed rate interest only mortgage offer, you should invest in high-yielding investments so that you can pay off the principal amount and the interest only mortgage rates with some surplus after the initial period expires.


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