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Loan Programs - Interest Only
Interest Only Mortgage
A mortgage loan that only the interest portion of the payment is paid on a monthly
schedule for a designated amortization period. |
iwayloan’s Interest Only Loan Program is on the leading edge of lending
products. This product enables the borrower to either lower their existing
payment or borrow more money for the same payment amount. Here are a few examples
of how this loan program can benefit you:
- A borrower has recently refinanced and wishes to further lower their
payment.
- A borrower has be laid off, transferred, has a spouse that has become
unemployed and wishes to lower their payment.
- A borrower cannot qualify
for the home they want because the payments are too high.
- A borrower knows
they are only going to be in the home for a few years and wants the
lowest possible payment.
- An Investor who wishes to purchase or refinance an investment
property and minimize the monthly payment and increase cash flow
What happens to the principle?
Either you keep it, or the mortgage
company keeps it: you choose.
The Golden Rule
Only time should build equity in your home; not your cash. |
Would you rather put your money in the bank and draw interest, or give it
to a mortgage company and make nothing?!
The principle remains the same throughout a chosen term of the loan. After
this chosen term expires, the principle amount begins to amortize.
Below is an example of how this works compared to a convention
principle and interest loan. Borrower
A and Borrower B are purchasing a new
home for the same price. Interest Only
rate and the conventional principle +
interest rate are the same: Fixed rate of 5.75%
for 30 years
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| Borrower
A |
|
Borrower
B |
Sales price
Down payment 20%
Loan Amount |
$275,000
$55,000
$225,000 |
Sales price
Down payment 20%
Loan Amount |
$275,000
$55,000
$225,000 |
Payment
Schedule:
|
Payment
Schedule: |
Borrower A chooses
the first 10 years to be Interest
Only.
Fixed 5.75% 30 year amortization
Payment = 1,078.13 per month
for the first 120 months
Payment = 1,579.59 per month
for the final 240 months.
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Borrower B chooses the
standard mortgage schedule.
Fixed 5.75% for 30 years
Monthly payment = 1,313.04
for 360 months |
|
Principle amounts
The amount of principle paid down from the standard payment for 5 years is 16,285
The amount of savings from the Interest Only Program for the first 5 years is
$14,094.
Use our mortgage calculator to
compare your own loan scenario. |
Interest Only Advantages
- The payment is $234.91 per month cheaper with Interest Only.
- You can qualify
to buy an additional 30,000 in home value.
- The principle stays with you,
not the mortgage company.
- The principle amount stated above does not include
interest income from investment.
- $14,094 invested over 5 years will yield
much more than the $16, 285 example stated above.
- Should you ever need
to do an Equity loan, you will pay in excess of 4,000 in closing costs.
The Interest Only loan will enable you
to simply
withdraw
your Principle from your own liquid account.
Simple!
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