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Interest-Only Mortgage Rates
Interest-only mortgage rates are based on fixed rate payments. Some
interest-only mortgage rates are set on adjustable rate payments.
Whichever is the case, interest-only mortgage rates are always tied
to the libor index.
The libor index of interest-only mortgage rates stands for London
Interbank Offered Rate. LIBOR is the interest rate offered by a specific
group of banks in London for matured U.S. dollar deposits. Choosing
libor index as basis for your interest-only mortgage rates entitles
you to a number of benefits. Below is a short list of these interest-only
mortgage rate benefits.
Benefits of Interest-Only Mortgage Rates
Interest-only mortgage rates allow you greater purchasing power. Because
interest-only mortgage rates have lower costs compared to fixed rates
or other types of loans, you are afforded extra money which would
have been spent on high monthly payments. Interest-only mortgage rates
give you the chance to qualify for other loans, thus enabling you
to buy more home or real estate properties.
In an interest-only mortgage rate, your payment schedule is more flexible
compared to other loan types. Most lenders of interest-only mortgage
rates do not put any restrictions or penalties should you find it
convenient to start paying off the principal loan balance. Even with
prepayments, many interest-only mortgage rate lenders will still let
you pay up to 20% of your loan balance during any 12 month period
without prepayment penalties. This flexibility of interest-only mortgage
rates gives homebuyers more incentives in taking an interest-only
mortgage rate.
Interest-only mortgage rate also reduces the income you need to have
in order to qualify for a loan. Lenders allow borrowers to qualify
for an interest-only mortgage rate if the interest rate is fixed for
a period of three or more years.
Interest-only mortgage rates also provide the consumer an unlimited
cash flow. Other loans, like fixed rates often have restrictions on
how much a home buyer can “cash out” during refinancing. There are
cases where the desired amount is $300,000 but since fixed rate loans
only allow $150,000 to the borrower, bank try to charge higher rates.
With interest-only mortgage rates, there is no limit to the amount
of cash you can take. Interest-only mortgage rates were created for
the wealthy and savvy investor types.
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"The small landholders are the most precious part of a state."
- Thomas Jefferson
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Some lenders though put certain restrictions on the amount of cash
out an interest-only mortgage rate borrower can take. But even then,
interest-only mortgage rate programs are made available to borrowers
who want to avoid incurring penalties when taking large equity sums.
Below are some interest-only mortgage rate programs made available
to you:
One Month Libor Loan – The interest-only mortgage rate of this loan
is the sum of the LIBOR index plus a margin of 0.125%. The margin
will remain fixed throughout the term of interest-only mortgage rate
loan. However, with the index value adjusted every month, your interest-only
mortgage rates may also be changed.
Six Month Libor Loan – Like the One Month Libor Loan, the interest-only
mortgage rate of this loan is the LIBOR index and margin which is
0.125%. The margin will only be adjusted every six months along with
the index value. This in turn would adjust your interest-only mortgage
rates every six months.
One Year Libor Loan – The interest-only mortgage rate of this loan
is the LIBOR index plus a margin of 0.125%. Every year, the interest-only
mortgage rate will adjust when the margin changes along with the index
value.
Additional Resources and Latest News:
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Best mortgage rates go privateFinancial TimesSome high street banks, such as Lloyds Banking Group, will not offer interest-only as an option for loans above £1m. For example, a buyer looking to borrow £2m on the high street would have a choice of a two-year discounted rate of 2.68 per cent from ...and more » |
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