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Comparing Mortgage Lenders
By Joe Kenny
When it comes to mortgage lending, checking and comparing the different lenders is the most difficult task. There are a number of charges applicable though, for every step of the procedure involved. Read more...
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Interest Only Mortgage Explained
By Nazir Hussain
Interest only is exactly what is says… Simply put you only pay interest on the money you borrow and for the duration that your borrow the money. The interest only term can be very misleading in the sense that the idea of the original borrowing is not made clear.
For example, if you borrow $100,000 to buy a property. Your is for a 20 year period. As an interest only mortgage, assuming an interest rate of 5% … your yearly interest charge on this amount is $5,000. Amortize that over 12 months; your monthly outgoing under the interest only scheme is $416.67.
Your total interest payments for the duration of the = $100,000.80 At the end of the period, you still owe the lender the original amount of money which you borrowed. Therefore, what appeared to be an attractive proposition at the outset does not look so good when you do the maths. This is the major draw back with interest only mortgages.
For the purposes of a comparison, consider the same amount of borrowing on a repayment basis:-
Assuming a borrowing of $100,000 over a 20 year period at an interest rate of 5%. Your initial monthly outgoings will be 2x$416.67 per month. Repayment scenario is much more expensive it would appear but you are reducing your capital slowly on a sliding scale. Your last monthly instalment gives you complete ownership of the property in question. Whereas the cheaper of the two options namely the interest only leaves you with a liability of $100,000 at the end of your term. This money has to be repaid as a lump sum to remove the legal charge by the lender which provides his security.
So, what kind of borrower should consider the interest only route?
Clearly, interest only route offers better prospects for short term borrowing. Plus, interest only route gives you access to more borrowing. Therefore, the kind of borrower that this suits is a developer rather than long term investor like a home buyer with a 20 year borrowing term as illustrated in this case scenario.
Information in the public domain suggests a preference for repayment over the cheaper alternative that is interest only mortgage. We decided to put that conclusion to a test by conducting a small survey.
1)Payment for a interest only is $416.67 per month.
2)Payment for a repayment is double that amount at $833.34 per month.
10 out of 10 people chose
California Mortgage Refinancing - California Refinance Rates
Avail the benefits of California mortgage refinancing. Also find how to secure best California home mortgage refinance rates which helps you find the best mortgage solution for your home financing needs to fit every situation.
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In California adjustable rate mortgage loan (ARM) programs, the risk of fluctuating interest rates is shared equally between the borrower and the lender.
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Bad credit OK! Find California mortgage loans to purchase your home, consolidate your debts-even save you from the edges of bankruptcy-and get yourself on the path to financial freedom.
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Refinance Your Mortgage - A Good Idea To Save
By Doug Pare
Do you know that refinancing your mortgage can save a considerable amount of money on your mortgage rates? Refinancing your mortgage helps you to enjoy the benefit of lower interest rates and reduce Read more...
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Understanding Affordability Mortgage Calculators
By Dennis Estrada
The borrower wants to know how much can he borrow. First, he went to many website to use the Affordability Mortgage Calculators. He got a quote from the calculator. Second, he asks a mortgage lender. Read more...
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California Mortgage Refinancing - California Refinance Rates
Avail the benefits of California mortgage refinancing. Also find how to secure best California home mortgage refinance rates which helps you find the best mortgage solution for your home financing needs to fit every situation.California Home Mortgage Loan Refinance : California Home Loan Refinance
Lowest rates available on California home loan mortgage refinance and refinance your mortgage while rates are low. Get California Home Interest Loan Refinance quotes online.California Adjustable Rate Mortgage Loans: ARM Loans CA
In California adjustable rate mortgage loan (ARM) programs, the risk of fluctuating interest rates is shared equally between the borrower and the lender.California Bad Credit Mortgage Loans
Bad credit OK! Find California mortgage loans to purchase your home, consolidate your debts-even save you from the edges of bankruptcy-and get yourself on the path to financial freedom.California FHA Loans : California FHA Home Loans
California FHA home loan is the best way to finance your home. Find how to secure best terms on California FHA home loans with a reliable lender.California FHA Home Mortgage Refinance Loans
California FHA home mortgage refinance loans with very competitive interest rates are great for low and moderate-income families who are trying to make the transition into home ownership or even borrowers with less than perfect credit.California FHA Mortgage Refinance : California FHA Loan Limits
California FHA mortgage refinance would help the homeowners Struggling to keep up with your California adjustable rate mortgage and as many people as possible purchase their own homes in California by increasing fha loan limits that made it easier than ever before.California First Time Home Buyer Loans
California first time home buyer loans provides instant rates for first time home buyers and also speaks about the importance of pre-qualification and credit history for first time home loans in CA. Offers best tips for the CA first time home buyer.California Home Mortgage Loan: California Home Mortgage Loan Rate
Find the best California home mortgage loan with the lowest interest rate for your home financing needs to fit every situation.California First Mortgage: California 1st Mortgage Loans
California first mortgage loan can be the ideal solution if you want to purchase your real estate property in California.California Fixed Rate Mortgage Loans: FRM Mortgage Loans CA
Apply for California fixed rate mortgage Loans, your loan interest rates remains fixed for the entire loan tenure (typically for thirty, twenty, fifteen, or ten years) depending on the loan period that you choose in FRM.California Home Equity Loans : CA Equity Mortgage Loan
Provides information on California home equity mortgage loan to get the funds you need without being forced to sell your home to get it.California Interest Only Mortgage Loan
Before purchasing interest only mortgage loans in California CA, it is extremely important to familiarize yourself with the loan procedure. Find more in this regard.
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