Wednesday, April 21, 2010

Interest Only Loan Calculator

An interest only loan calculator can reveal lots of useful information amount your loan payments. This is used quite often with mortgage loans, but can be had for other types of loans as well. It may mean asking a creditor for this facility, but you never know unless you ask. It can be used to determine a number of things such as:

• Whether to choose an interest only type of mortgage

• Show how this type of mortgage will impact the amortization schedule

• Will show monthly savings with the interest only mortgage type

The main reason for using an interest only loan calculator is to help a borrower determine how much they will save in loan payments in the short run.

The interest only loan calculator is used to calculate the monthly repayment on an interest only loan. What is an interest only loan? This type of loan is one where the borrower pays a lower monthly payment in the early stages of the loan. This allows them to save money or at least not over-reach to make payments. This type of loan is normally taken in the hope that later on, an increase in income will facilitate being able to pay a larger amount.

It is important to fully understand that there are also drawbacks to an interest only loan. The interest only loan calculator will help identify some of these. For instance, with type of loan you may find that while you have save money, you have no equity in your home. That is, the mortgager still owns 100 percent of the property.

Using an interest only loan calculator is simple, but you need to have certain information ready. The most important being:

• The total amount of the loan

• The interest rate

• How long the loan will last

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