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Interest Only Mortgage Calculators

Many people are surprised to see that you can still find an interest only mortgage calculator on lender and broker sites. After all, the recent endowment mortgage boom and bust has simply served to make people veer away from this type of loan. The truth is that the majority of lenders will still offer this option and the calculator that goes with it. Chances are, however, you won't see the word 'endowment' given too much priority in the lender's descriptions!

A few decades ago, interest only mortgages were the real flavour of the month in the home loan stakes. This option was held to be one of the cheapest ways of repaying a loan - in this instance, regular repayments just had to be made on the interest. The capital repayments would have to be covered by a pension scheme, an endowment or an ISA - which in good stock market years would more than pay off the loan and would hopefully leave the consumer with a tidy lump sum afterwards.

The sharp decline in investment results over recent years has caused severe problems for consumers that have opted to go this route with their mortgage repayments. The fact is that an underperforming endowment investment can just have one result - it won't create a fund large enough to repay the mortgage capital, leaving the homeowner with a large and unexpected debt. With this in mind, it's hardly surprising that many consumers are veering away from these options in favour of straight repayment packages.

There is, however, still a market for these products. This option can prove to be a good investment in certain instances but no reputable lender will recommend it without careful research and thought on the part of the consumer. An interest only mortgage calculator is just one of many tools that can be used to help make this kind of decision.

Payments on this type of mortgage are lower than on a standard repayment product because the only thing to be paid off immediately is the interest. The average interest only mortgage calculator therefore simply helps estimate this repayment cost. The capital repayment is something you will have to manage elsewhere. Unfortunately, due to the unpredictable nature of the stock market, you're unlikely to find a calculator that can accurately predict this.

There are various interest only mortgage calculator options available on the market at the moment. For example, the majority of high-street banks and building societies will offer a calculator on their web site. This will be linked to their current products, services and rates and will give a result based on the choices you make from their portfolio. In this instance the calculator gives an immediate snapshot of payments and rates if you were to take out an interest only mortgage with the institution now. There are also many generalised similar services available that will work across lenders, rates and products to give you more of a market snapshot.

The average calculator is actually fairly sophisticated. The calculator will allow you to make estimates based on various input data. So, you can, for example, input your income to see how much you can borrow, gauge how much you want to borrow on how much you can afford to pay each month or simply work on the lender's rates. The interest only mortgage calculator won't help you work out how to repay your capital however - it's only interested in the interest repayments. The fact is that lenders don't insist that you make provision for capital repayment through them when you take out an interest only mortgage - and the interest only mortgage calculator will only tell you the relevant data. The rest is up to you.