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Interest Only Mortgage

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Interest Only Mortgage

Interest only mortgage products can be an excellent choice. Interest only mortgage products offer the lowest payment. Interest only mortgage products mean you can buy more home. Interest only mortgage products are flexible. You may make additional interest only mortgage payments toward your principal balance at any time. By reducing the balance, the next interest only mortgage payment will be lower as your interest only mortgage payment is calculated on the current amount. This is a significant difference from a fully amortizing mortgage as extra mortgage payments do not change your payment. I am a mortgage broker specialized in the interest only mortgage with 237 lenders offering the interest only mortgage products to ensure you get the best mortgage for your specific situation 

Interest only mortgage products are available for a 30 or 40 year term, with the first 10 years interest only and the final 20 years fully amortizing although I am now seeing many lenders offering this option on Interest Only Mortgage ARM products with fixed rate periods of 3, 5, and 7 years. At the end of the interest only period, your mortgage will convert to fully amortizing for the remaining term. Reduced documentation interest only mortgage loans are available as well.

Of all of the interest only mortgage programs available, the Cash Flow Interest Only Mortgage offers the greatest flexibility by far.

These products were originally designed for individuals whose income is cyclical. For example, a sales executive with a relatively low base salary and commission payouts quarterly would benefit from it. You have the lowest possible payment during months when no bonus is paid and you can make contributions to the principal balance when the bonus is paid. However, I am seeing individuals in many situations choosing the product as a method of lowering their payment, sometimes significantly.

This, or any other product, will not be the right choice for everyone, but it can be a very effective choice for some individuals. Please call or send an email with the specifics of your situation and I will be happy to discuss this alternative with you.

An example of how powerful this tool can be:

On a $250,000 loan at 6.000% for 30 years-
Principal and Interest payment= $1498.88
Simple Interest payment at 6%= $1250.00
Total Monthly savings= $248.88

To make the comparison for your own specific situation, calculators to find the amortizing payment are available on this website. The math to find the payment is, Loan Amount x Interest Rate / 12.

I have developed a PowerPoint presentation on interest only mortgage products, some real world examples, and some suggestions on how best to use them available by email

Read more about Interest Only Mortgage Closing Costs

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As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.