Interest Only Loan Payment Calculators

2008-01-29 10:08:55

( Financial )



Benefits and Risks of an Interest Only Mortgage

Interest only mortgages allow you to borrow money for a home but pay a lower amount initially. Without having to pay the principal, your monthly payment amounts are significantly lower. You have more opportunity to budget and save up during the initial period, with the assumption you will have earned a higher salary rate by the time you need to amortize the principal.

On the other hand, you also face a higher risk that your future income may not actually be any higher than what you had expected. You may also be faced with other contingencies that will prevent you from meeting both interest and principal payments in the future, such as unemployment, divorce, or medical emergencies.

Interest Only Loan Payment Calculators and Other Helpful Aids

There are many sites that give you helpful information about interest only mortgages. These sites also feature interactive interest only loan payment calculators that can instantly give you the exact interest amount you need to pay.

In fact, most of the sites also feature student loan payment calculators as well as other tools for different types of financial packages. Each of the loan payment calculators work in a similar way, and the resulting figure is dependent on the information that you input.

How to Use an Interest Only Payment Calculator

On the interest only payment calculator, you will see several blank fields that you need to fill in, namely: principal or loan amount, total number of years of the loan term, annual interest rate, and interest only period.

You need to input all these data into the fields before you can get a resulting monthly interest only mortgage payment. You will see a summary of the monthly payments for the interest only period, as well as the monthly payments if principal is included.

In fact, you can change any of the variables on the interest only loan payment calculator to see different results. You can then use the resulting figures as bases for determining whether your present income can afford the mortgage terms.


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