Interest Only Loan Calculator – How to Use It

What is an Interest Only Loan Calculator?

An interest only loan is a special type of arrangement between a lender and a borrower, wherein the borrower only pays interest, while payment for principal is delayed for several years. This is common in mortgages. People make this loan arrangement so that they will pay a lower monthly payment for the first five years of the loan.

Interest Only Loan Calculator

are available online. This will help you compute HOW MUCH you are going to pay monthly if you apply for this type of loan. FOR EXAMPLE, if you take out a mortgage payable for 30 years that costs $250,000 at 6.5% interest, your normal monthly payment will cost $1580.17. However, if you borrowed money on an interest only loan, your monthly payment will only cost you $1,354.16, saving you a total of $13,560.60 in a standard period of five years. You can compute for various costs and rates on the interest only loan calculator available online.

The interest only loan calculator allows you to input variables like amount borrowed, annual interest rates, and the number of years to pay. Once you input these data, you will be given a quote of your monthly interest only payment for five years, the total cost of all payments, and the total number of payments you will make.

There are several websites that offer free interest only loan calculator, like money-zine.com. However, these sites are meant to be used as a guide only. Its accuracy is limited, which is why you should still consult with qualified professionals.

What is the Advantage of Interest Only Loan?

The advantage of this type of loan arrangement is that in the short run, the interest only mortgage rates will save you money, but will cost more when you compute the total cost of the loan over the 30-year period. On the sixth year of your repayment, the principal together with the interest rates will be paid on a monthly basis, hiking the monthly payments you used to pay in the interest only arrangement. Most borrowers who apply for an interest only loan assume that after a period of five years, their salaries will be high enough to cover the hike of the principal payments AND the interest rates.

When computing for the total amount of loan using the interest only loan calculator, remember to add the TAXES you have to pay using mortgage calculator with taxes. Lenders usually underwrite your loans by assuming that your insurance and property taxes are paid monthly.

Online Banking

You can make your transactions for all these loan repayments through an online bank. The TFC Online Banking allows you to check your account balance, see your most recent transactions, transfer funds between qualifying accounts, and pay your bills online. Simply register at any TFC location near you, and you will have access to TFC online banking.

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