What is the interest of the amortization plan?
Interest Plan only describes the monthly payment for a loan with the possibility of only interest. There is a specific period in such a loan where the debtor is only allowed to pay only the interest part of the loan, resulting in a lower monthly payment for a certain period of time. With a fully amortized loan, all payments that are made by creditors
Most interest loans are structured into two different and different periods. There is only interest during which the debtor is only responsible for repayment of the loan interest. The length of the interest period will vary depending on the specific terms of the loan. Upon completion, the loan will restructure and will require fully amortized payments for the rest of the loan period.
The advantage of the loan is only interest, the fact that lower monthly payments during the first period of the loan. Debtors who choose this type of loan do so often when they plan to sell or refinance a house in a short time after shopping. If the prices of houses are in a period of rapid recognition, PSKThe Loan Yets only interest loan ability to make low monthly payments until the house is sold with profit or refinanted.
This is how the plan of the amortization of interest works. This example assumes that the debtor wants to buy a $ 100,000 house in the US (USD) at an interest rate of 5.5%. If the loan is a 30 -year -old mortgage, with only 15 years, monthly payments for the first 15 years of loans would be $ 458.33. After interest, a fully amortized monthly payment for the second half of the 30 -year credit period would increase to $ 817.08.
Unlike the interest plan only amortization, if the same debtor has selected a conventional 30 -year mortgage, a monthly payment for a lifetime would be $ 567.69. The first payment of a conventional loan would consist of $ 458.33 for an interest on a loan and $ 109.46, which is assigned to the principal. The second payment of a conventional loan, although still in the total amount of $ 567.69, would be glassShe gave $ 457.83 for interest and $ 109.96 for the main. The last payment of the loan, again in the total amount of $ 567.79, would consist of an assignment of $ 2.59 to interest and $ 565.20 on the principal.
The above example illustrates the possible disadvantage of the amortization schedule only of interest. With a loan only with the interest of lower monthly payments at the beginning, they actually increase the total amount that the debtor repays to the creditor. Take the above examples, someone who borrows $ 100,000 with the conflict AMORTIZATIZE VENTIONAL by repaying $ 204,404 for a life of a loan. The debtor, who decided only on the amortization plan, would pay off $ 229,575 for a loan for life.
Another possible disadvantage only of the interest of amortization is that the debtor who decides only interest would not build any capital beyond the recognition of the property. Without payment payments that apply to the principal only during the interest period, the balance of the main main ones will not decrease until the debtor makes payments above only the interest amount. Consumers whoThey are interested in a loan with the possibility of interest only, they should contact a mortgage creditor for more information.