Interest only mortgage products can be an excellent choice for some individuals. Interest only mortgage products are designed to offer the lowest payment possible as you are not paying toward the principal in your monthly payment. Interest only mortgage products may mean that you can buy more home than with a fully amortizing mortgage, or if you are refinancing you will have a lower monthly payment. Of course, you may make additional payments toward your principal balance at any time. If you choose to reduce the balance, the next monthly payment will be lower as your payment is calculated on the current loan amount. This is a significant difference from a fully amortizing loan as extra payments to that type of loan do not change your payment at all.

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

They are available for a 30 or 40 year term, with the first 5 or 10 years interest only (depending on the lender selected) and the final 20 to 25 years fully amortizing although I am now seeing many progressive lenders offering this option on Interest Only Arms with fixed rate periods of 3, 5, and 7 years being the most common. 

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 give me a 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 mortgage at 6.000% for 30 years-
Principal and Interest payment= $1498.88
Interest Only mortgage payment at 6%= $1250.88
Total Monthly savings= $248.88

If you want 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 simple interest payment is, Loan Amount x Interest Rate / 12.

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

I have developed a short presentation in .pdf format on these products, some real world examples, and some suggestions on how best to use them available by email

I offer an analysis of your situation today can make suggestions on how small changes in how your mortgage is structured today can have a life changing effect in the years to come.  Read more

Prequalify for your interest only mortgage.