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Why exactly do people find interest only mortgage payments attractive? Basically, interest only mortgage payments can help the borrower a lot. Although good for borrowers who have a steady and guaranteed cash flow from the present time to the future, this type of payment allows the borrower more control over when he pays down the principal.

This will undoubtedly cause the later payments to be higher, early payments though can save you thousands in interest payments for the long run so it would be beneficial that you pay additional principal payments whenever you can. Likewise, by taking an interest-only loan you can borrow a lot more money.

If you have this type of payment you can easily calculate it using a calculator and this following method. List down your current mortgage balance and multiply it by the interest rate that you have negotiated with your lender. For example, you have a current mortgage balance of $1,000 and an interest rate of 5% so following the formula you’ll get 1,000×0.05 which is $50. Then divide this amount by the number of payments per year which in this case is in a monthly basis. So you’ll get 50/12 which will then get you $4.167. This will be your minimum amount which you have to pay every month. Take note though that this is only your minimum monthly payment which does not include any principal payment and there might be some other additional payments.

Remember that before you compute for your minimum, the mortgage balance that you should take into consideration is your remaining balance which you need to pay. You don’t have to include the amount that you have already paid off. Lastly, take note that you are using the right interest rate. Fixed interest rate remains the same throughout the entire duration of your mortgage while an adjustable interest rate changes based on the prime interest rate and your negotiated margin rate.

Having interest only mortgage payments can help you pay off your debts easily without accruing too much interest provided that you have excess cash on hand but it will surely help you save a lot in the long run.