A One Month Libor Interest Only Loan is based off of the 1-Month Libor Index (Click Rates) and is calculated by taking the 1-Month LIBOR index plus a margin rounded to the nearest one-eighth of one percentage point, (0.125%). The margin will not change throughout the term of the loan however the index value will be adjusted every month, which will cause your interest rate to be adjusted accordingly either up or down.

A Six Month Libor Interest Only Loan is based off of the 6-Month Libor Index (Click Rates) and is calculated by taking the 6-Month Libor Index plus a margin rounded to the nearest on one-eighth of one percentage point, (0.125%). The margin will not change throughout the term of the loan however the index value will be adjusted every six months, which will cause your interest rate to be adjusted accordingly either up or down.

A One Year Libor Interest Only Loan is based off of the 1-Year Libor Index (Click Rates) and is calculated by taking the 1-Year Libor Index plus a margin rounded to the nearest one-eighth of one percentage point, (0.125%). The margin will not change throughout the term of the loan however the index value will be adjusted on an annual basis which will cause your interest rate to be adjusted accordingly either up or down.

A Three Year Libor Interest Only Loan is based off the 1-Year Libor Index (Click Rates) and is calculated by taking the 1-Year Libor Index plus a margin rounded to the nearest one-eight of one percent point, (0.125%) after the initial 36 month fixed period is completed. During the fixed period, neither the interest rate nor the margin can change. For years 4 thru 30 the interest rate will adjust on a yearly basis based on a fixed margin. Borrowers have the option of continuing with annual 1-Year adjustments or refinancing into a new loan. Typically this loan is best suited for someone who will only be in their home for a few years.

A Five Year Libor Interest Only Loan is based off the 1-Year Libor Index (Click Rates) and is calculated by taking the 1-Year Libor Index plus a margin rounded to the nearest one-eight of one percent point, (0.125%) after the initial 60 month fixed period is completed. During the fixed period, neither the interest rate nor the margin can change. For years 6 thru 30 the interest rate will adjust on a yearly basis based on a fixed margin. Borrowers have the option of continuing with annual 1-Year adjustments or refinancing into a new loan. Typically this loan is best suited for someone who plans to stay in their home for a while and wants to maximize their monthly cash flow. Currently this is the most popular Interest Only Loan.

A Seven Year Libor Interest Only Loan is based off the 1-Year Libor Index (Click Rates) and is calculated by taking the 1-Year Libor Index plus a margin rounded to the nearest one-eight of one percent point, (0.125%) after the initial 84 month fixed period is completed. During the fixed period, neither the interest rate nor the margin can change. For years 8 thru 30 the interest rate will adjust on a yearly basis based on a fixed margin. Borrowers have the option of continuing with annual 1-Year adjustments or refinancing into a new loan. Typically this loan is best suited for the conservative borrower who wants to take advantage of the cash savings while minimizing their exposure to interest rate fluctuations. Currently many borrowers are choosing this type of loan instead of the traditional 30-Year Mortgage.

A Ten Year Libor Interest Only Loan is based off the 1-Year Libor Index (Click Rates) and is calculated by taking the 1-Year Libor Index plus a margin rounded to the nearest one-eight of one percent point, (0.125%) after the initial 120 month fixed period is completed. During the fixed period, neither the interest rate nor the margin can change. For years 11 thru 30 the interest rate will adjust on a yearly basis based on a fixed margin and payments will be fully amortized over the remaining term. The borrower is now obligated to make principal and interest payments to the lender and will no longer have the Interest Only Option. This type of loan was recently introduced to the market and has gained tremendous popularity amongst long term home buyers who want to live in their home for 10 year and not have to worry about interest rate fluctuations.

A fixed rate for 30 years where the first 10 years are interest only payments. After the initial period has passed (121st month) the unpaid balance is fully amortized over the remaining term of the loan however the interest does not change. This type of loan is similar to a traditional 30-Year Fixed Mortgage but has the advantage of allowing borrowers to make a reduced (Interest Only) monthly payment the first 10 years.