| Calculators >> Fixed
Rate Mortgage vs. Interest Only Mortgage
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.
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 year 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 an
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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Information and
interactive calculators are made available to you as self-help
tools for your independent use and are not intended to provide
investment advice. We can not and do not guarantee their
applicability or accuracy in regards to your individual circumstances.
All examples are hypothetical and are for illustrative purposes.
We encourage you to seek personalized advice from qualified
professionals regarding all personal finance issues.
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