I was recently asked to check out an online mortgage interest calculator and interest only mortgages that could be useful for our UK readers. At first I was skeptical. But if you know anything about me, you’d know I’m a calculator junkie (sad, I know) so I checked them out. Below are my reactions to the calculators.
Both the regular mortgage interest calculator and the interest only mortgages page have a pretty easy to use calculator (scroll down on the interest only page) where you can easily slide the inputs around and see what the mortgage payment would be – no clicking to go to a next screen or anything. That was pretty cool.
Three other things that jumped out at me from the website.
The first one is at the bottom of the page where it says:
THINK CAREFULLY BEFORE SECURING DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
If you were around last week when we talked briefly about how not to get out of debt, you’d know I feel pretty strongly that exchanging unsecured debts for a new loan secured by your house is a pretty bad idea. It looks like this is a warning required in the UK (I searched for that saying and it came up a bunch). Pretty cool to see though. I wonder if that deters people from securing unsecured debt. I know when I saw “your home may be repossessed” it struck a nerve a bit.
The second thing that jumped out at me was this message on the interest only mortgages page:
If you take out an interest only mortgage, then your repayments only repay the interest and not the capital sum that was loaned in the first place. Interest only mortgages were once very popular when taken out in association with an endowment policy that would repay the actual sum that was borrowed. Without the endowment policy, the house would have to be sold at the end of the mortgage term in order to repay the capital. But consumer concerns about under-performing endowments have reduced demand for interest only mortgages recently.
Finally, the third thing that jumped out at me was the difference in monthly payments for interest-only versus fully-amortized options.
So check out the mortgage calculators. They’re pretty cool. The link to their site is below in the by line.
Until next time, put your credit card down and slowly step away from the mall!
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