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  • Fixed rate mortgage vs. interest only mortgage

    A fixed rate mortgage has the same payment for the entire term of the loan. Use this calculator to compare a fixed rate mortgage to Interest Only Mortgage. (Please note: This calculator is intended to provide approximate information on loan payments and does not constitute an offer to extend credit. Your actual payment information may vary.)


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    Definitions

    Interest Only Mortgage
    An Interest Only mortgage only requires monthly interest payments. Since you are not paying any principal, this can lower your monthly payment. However, since your mortgage's principal balance is not decreased, you will have a balloon payment at the end of the mortgage's term. Some Interest Only mortgages will also be adjustable rate mortgages (ARM). An Interest Only ARM will often have a period where the interest rate is fixed, and then it is adjusted annually. This calculator assumes that the interest rate for your Interest Only Mortgage remains fixed for the entire term.
    Mortgage amount
    Expected balance for your mortgage.
    Term in years
    The number of years over which you will repay this mortgage. The most common mortgage terms are 15 years and 30 years. Please note that for the Interest Only Mortgage you will have a balloon payment for the entire principal balance at the end of the loan term.
    Interest rate
    Annual interest rate for each mortgage type.
    Prepayment
    A monthly prepayment of principal you would like to apply to your Interest Only Mortgage balance.
    Monthly payment
    Monthly principal and interest payment (PI) for the Fixed Rate Mortgage. This is an interest only payment for an Interest Only ARM.

    Information and interactive calculators are made available to you as self-help tools for your independent use. We cannot and do not guarantee their accuracy or their applicability to your circumstances. All calculations are based on user inputs and do not reflect any guarantee or commitment of the loan, interest rate, expected savings or tax advantage. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.