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Interest Only Mortgage

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Deferred Interest Mortgage

Deferred Interest Mortgage products are available from several lenders. Deferred interest mortgage products are used on my home and investment property. 

An issue for many is managing income and expenses. Income varies and unplanned expenses come up. For many, our mortgage payment is our largest expense, and the least flexible. The deferred interest mortgage was designed to give you control over your payment. Choose one of four deferred interest mortgage payment options based on your needs.

        Deferred Interest Mortgage Minimum Payment    A deferred interest mortgage payment is set for 12 or 60 months at a reduced rate. The deferred interest mortgage minimum payment rate for the 12 month option is 1.00%, and the 60 month option is 1.90%. This maximizes cash flow and may allow flexibility in managing tax deductions. This minimum payment can not increase by more than 7.5% each year.  Read more about the tax considerations of a deferred interest mortgage. If you have concerns over deferred interest, read about the small amount of appreciation required to offset it.

        Interest Only Payment    Defer paying principal on your loan and improve your cash flow. This is not available if the interest only payment is less than the minimum payment.

        Fully Amortizing Payment Options    You may to make a full payment based on either a 30 year or 15 year payment schedule. I have included a deferred interest mortgage statement as well.

Choose your index from the 1 month LIBOR or the MTA .

Here is a 10 year average comparison between a 30 year fixed and fully indexed LIBOR, MTA, COFI, and the 1 year Treasury Index in chart form.

Additional Options    If you want the security of a fixed payment while taking advantage of the low payment rates, there is a 5 year fixed payment option. With the 5 year Fixed Payment option, you have a fixed minimum payment for five years. Increase the term from 30 to 40 years lowering your payment further. LTVs are available up to 100% !

The Minimum Payment Advantage    The example is based on a $400,000 mortgage. It compares a 30 year fixed rate payment based on the 10 year average to the minimum payment available on the product. Assumes that the Minimum Payment increases by the maximum 7.5% per year.

                    30 Fixed                    Cash Flow Minimum                 Monthly Savings                    Annual Savings

Year 1        $2,855                                $1,287                                        $1,586                                    $18,816
Year 2        $2,855                                $1,384                                        $1,471                                    $17,652
Year 3        $2,855                                $1,488                                        $1,367                                    $16,404

                                            Savings over 3 years        $52,872
                                            Savings invested at 8%    $56,885

I have a document detailing how this program works. Send me an email requesting a copy of "Understanding the Option Arm Mortgage".

I have added a website dedicated solely to the Deferred Interest Mortgage.

Here is a useful Deferred Interest Mortgage payment calculator

Read very important information about Deferred Interest Mortgage Prepayment Penalties

Read more about Deferred Interest Mortgage Closing Costs