Principal and Interest Loans: Difference Between Interest Only
The majority of mortgages land in the principal and interest loans category. These are straightforward home loans that have a principal and interest rate charge. Non-bank lenders like Mortgage House help homebuyers become homeowners. We offer discounted interest rates, introductory rates, and customised mortgage solutions.
Homebuyers come across a lot of lending and legal jargon during the mortgage approval process. You’ll see terms like P&I V Interest only. This equals the assessed loan term. The formula takes the contract terms and subtracts them from the interest-only period.
Let’s say you qualify for the Mortgage House Advantage 3 Years Fixed Investment Special mortgage. This is a short-term home loan that offers a fixed rate for its entire term. If you pick a 30-year interest-only loan, the interest-only period expires. It lasts between one to ten years.
The latter breaks down into two parts. The interest-only period. Then the principal and interest period.
When you purchase a house, you probably accept the monthly repayment as is. In some cases, the borrowers need to pay attention to the portions that expire. Borrowers must take action beforehand. This prevents the monthly repayments from ballooning up and shocking the homeowner.
It’s possible to refinance some loans. Renewing the discounted interest rate is possible in other cases. Check out our home loan interest rates calculator.
Principal and Interest Loans Conclusion
Homebuyers can apply for principal and interest loans. They can also apply for loans that have introductory offers. When you understand how your loan breaks down, you can gauge its true cost. For more information, get in touch with our Mortgage House loan specialists.