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| On an interest only loan, if I pay down a large amount on my principle will my Interest Only payment go down the next month to reflect the lower balance? |
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Posts: 92
Location: Las Vegas | Yep, your following month's payment will be reduced to reflect the interest owed on the new lower amount.
Best,
John I |
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Posts: 15
| No, your payment will stay the same. You will just continue to have more of your payments go towards principal, and it will not be such a difficult raise to your payments when the Interest Only period ends.
What most people that get interest Only loans are not told is that when the I/O period is over, your payments go up a lot. Not only are you having to make some principal payments, but the loan now has to be repaid over the remaining period. so now you have to pay it off in 20 years.
I would suggest that you pay your loan down during the period as much as you can, so there is not such a shock to your finances when it changes to a principal & interest payment.
I will be glad to explain things on a personal basis if you want to send me your loan amount. how long the I/O period is and when you got your loan
Charles
Charles
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Calculating interest
