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Mortgage Payment Formula:
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A part repayment part interest-only mortgage is a hybrid loan structure where a portion of the loan is repaid through regular principal and interest payments, while the remaining portion only requires interest payments during the loan term.
The calculator uses the mortgage payment formula:
Where:
Details: Accurate mortgage calculation helps borrowers understand their payment obligations, plan their finances, and make informed decisions about loan structures that suit their financial situation.
Tips: Enter the total loan amount, annual interest rate, loan term in years, and the percentage of the loan that will be repayment (vs interest-only). All values must be valid positive numbers.
Q1: What are the advantages of part repayment part interest-only mortgages?
A: They offer lower initial payments than full repayment mortgages while still building some equity through the repayment portion.
Q2: What happens at the end of the loan term?
A: The repayment portion is fully amortized, while the interest-only portion typically requires a balloon payment of the remaining principal.
Q3: Are there risks with interest-only mortgages?
A: Yes, the main risk is facing a large lump sum payment at the end of the term if the interest-only portion hasn't been repaid through other means.
Q4: Who typically uses this mortgage structure?
A: Often used by investors who expect to sell the property before the term ends or those with irregular income who want lower initial payments.
Q5: Can the repayment portion be changed during the loan term?
A: This depends on the specific loan terms and lender policies. Some loans allow adjustments to the repayment percentage.