Fixed Rate vs. Interest Only

A fixed rate mortgage has the same payment for the entire term of the loan. Use this calculator to compare a fixed rate mortgage to Interest Only Mortgage.

Fixed Rate Mortgage vs. Interest Only Mortgage

An interest mortgage could save you as much as SAVINGS_IO_MONTH per month.

**GRAPH**

A LOAN_AMOUNT fixed rate mortgage with a term of TERM years at INTEREST_RATE0 has a monthly payment of MONTHLY_PI0. An interest only mortgage at INTEREST_RATE2 has a MONTHLY_PI2 monthly payment. This could save you SAVINGS_IO_MONTH per month over a fully amortizing fixed rate mortgage.

Interest Only Mortgage
Initial savings on monthly payment	SAVINGS_IO_MONTH
Payment savings first year	SAVINGS_IO_FIRST_YEAR
Payment savings for five years	SAVINGS_IO_FIVE_YEAR

&NBSP;	Fixed Rate Mortgage	Interest Only Mortgage
Results Summary
Loan amount	LOAN_AMOUNT	LOAN_AMOUNT
Term	TERM years	TERM years
Interest rate	INTEREST_RATE0	INTEREST_RATE2
Initial monthly payment	MONTHLY_PI0	MONTHLY_PI2
First year totals:
&NBSP;&NBSP;Interest &NBSP;&NBSP;Principal &NBSP;&NBSP;Payments	FIRST_YEAR_INTEREST0 FIRST_YEAR_PRINCIPAL0 FIRST_YEAR_TOTAL0	FIRST_YEAR_INTEREST2 FIRST_YEAR_PRINCIPAL2 FIRST_YEAR_TOTAL2
Five year totals:
&NBSP;&NBSP;Interest &NBSP;&NBSP;Principal &NBSP;&NBSP;Payments	FIVE_YEAR_INTEREST0 FIVE_YEAR_PRINCIPAL0 FIVE_YEAR_TOTAL0	FIVE_YEAR_INTEREST2 FIVE_YEAR_PRINCIPAL2 FIVE_YEAR_TOTAL2
Total interest	TOTAL_INTEREST0	TOTAL_INTEREST2
Total payments	TOTAL_PAYMENTS0	TOTAL_PAYMENTS2
Ending balance	ENDING_BALANCE0	ENDING_BALANCE2

Payment schedule

**REPEATING GROUP**

Definitions

Fixed Rate Mortgage: A fixed rate mortgage has the same interest rate and monthly payment throughout the term of the mortgage. The payment is calculated to payoff the mortgage balance at the end of the term. The most common terms are 15 years and 30 years.
Interest Only Mortgage: An Interest Only mortgage only requires monthly interest payments. Since you are not paying any principal, this can lower your monthly payment. However, since your mortgage's principal balance is not decreased, you will have a balloon payment at the end of the mortgage's term. Some Interest Only mortgages will also be adjustable rate mortgages (ARM). An Interest Only ARM will often have a period where the interest rate is fixed, and then it is adjusted annually. This calculator assumes that the interest rate for your Interest Only Mortgage remains fixed for the entire term.
Mortgage amount: Expected balance for your mortgage.
Term in years: The number of years over which you will repay this mortgage. The most common mortgage terms are 15 years and 30 years. Please note that for the Interest Only Mortgage you will have a balloon payment for the entire principal balance at the end of the loan term.
Interest rate: Annual interest rate for each mortgage type.
Prepayment: A monthly prepayment of principal you would like to apply to your Interest Only Mortgage balance.
Monthly payment: Monthly principal and interest payment (PI) for the Fixed Rate Mortgage. This is an interest only payment for an Interest Only ARM.

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Fixed Rate vs. Interest Only

An interest mortgage could save you as much as SAVINGS_IO_MONTH per month.

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Definitions

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