Interest-Only Mortgage with Extra Payments

Interest-Only loans, as their definition implies, require considerably lower monthly payments than regular mortgage plans. Some minor extra payments towards the interest, however, can save you even more money.

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Interest Rate : (%)
Length : (Years)
Additional Payment : ($)
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Financial Analysis (Switch to Plain English)
  Interest-Only With Additional Payment
Average Monthly Payment : $1,041.67 $1,054.27
Months Paid : 360 360
Total Monthly Payments : $375,000.00 $379,537.50
Total Interests Paid : $375,000.00 $361,537.50
Interest Savings : $13,462.50
Balance : $250,000.00 $232,000.00
Equity Appreciation $0.00 $18,000.00
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Minor regular extra payments can make a major overall difference for your interest-only mortgage costs. If it is, say, a 30 year loan for $250,000.00 at 5.000%, the monthly payment will be about $1,041.67 and you will have paid $375,000.00 in interest by the end of the loan term.

If you pay an extra $50.00 per month, however, your average monthly payment will not be much higher, only $1,054.27. At the end of the loan term, you will have paid $361,537.50 in interest. As your extra payment gets the interest paid off sooner, you will save $13,462.50 in interest by paying an extra $50.00 each month. This will reduce the balance of your $250,000.00 loan to $232,000.00.