
What is home equity and how can you access it?
If you have been paying off your mortgage diligently, chances are you’ve accrued some equity over the years. Equity can be used for a number...
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AgreeThis interest-only calculator helps determine if an interest-only home loan is a good fit for you. An interest-only loan is an attractive mortgage for borrowers who are looking to purchase a more expensive property or want to make smaller payments at the beginning of their loan. Aside from lower initial monthly payments, an interest-only loan still gives you the flexibility to make principal payments on your schedule. However, this is not without drawbacks. To get a clearer picture of how much you’ll pay at the beginning of your loan, enter loan details such as loan amount, interest rate, loan term, repayment frequency, length of the interest-only period, and any loan fees in the Interest-Only Mortgage Calculator.
The downsides associated with interest-only loans are larger payments at the end of your interest-only period since you are paying off the principal in a shorter time. For unprepared borrowers, this may mean future monthly payments that may be harder to afford. Rateseeker’s calculator works out the loan repayment amount due after it reverts to principal plus interest payments.
Our mortgage specialists can help you better understand the pros and cons of an interest-only loan. Get expert advice by getting in touch with Rateseeker today.
Our calculator borrowers make informed decisions about their home financing. Whether it’s your first home or your third investment home, our calculators help you determine how much you can borrow, pay and save as well as compare loan products to see which one better fits your financial capacity. Our calculators such as the mortgage repayment calculator interest only are a good starting point for anyone trying to find a home loan appropriate to their needs.
After the Australian Prudential Regulation Authority (APRA) enforced restrictions on interest-only home loan lending in 2017, interest-only loans became less popular but are still offered by lenders but with more caution. While interest-only mortgages aren’t for everyone, lenders may be willing to write interest-only loans to borrowers with a great credit score, low debt-to-income ratio and can provide a large down payment.
If you fit the criteria or are in a unique circumstance where an interest-only loan may be the right fit, Rateseeker can help. Our mortgage specialists match borrowers with great home loans by comparing loan products from the top banks and lenders in Australia. Call us to discuss your options today, or fill out the form and we’ll get back to you in 24 hours./p>
Here are the information you need to input into the calculator:
The result will not only provide you with your monthly repayment during the interest only period but also what your loan repayment would look like when it reverts to principal and interest.
The repayments on principal and interest will depend on how long you have your interest only period for. This is because the longer you have an interest only period, the shorter time you have, to pay off your loan hence your loan repayments would be higher.
Example
If you have selected a 5-year interest only period then you will have 25 years to pay off your principal amount.
The calculator can help you see how much money you free up with an interest-only loan and how much the principal and interest repayments are when it reverts after the interest only period expires. This allows you to have greater control over your mortgage repayment and cash flow.
If you are only servicing the interest and not paying off the principal, then how would an interest only home loan benefit you.
This is determined by your goals and objectives. There are a few reasons why interest only is considered suitable
Whatever your reason is for taking out an interest-only loan, ensure you seek proper mortgage advice before applying.
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Read MoreAny calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn’t take into account any product features or any applicable fees.
*2.19% Interest rate based on an Owners Occupied, Principal and Interest, 3 years fixed period, minimum loan size of $250,000, maximum LVR of 80%, over a 30 year term. Eligibility subject to servicing requirements, contact one of our specialised mortgage brokers for more information.
^3.27% Comparison rate based on a loan of $250,000 over a 30 year term. WARNING: The comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Costs such as redraw fees or early repayment fees and cost savings such as fee waivers are not included in the comparison rate but may influence the cost of the loan.