Interest Only Loan Schedule

An interest only loan can also be set up during offer drafting. Under this repayment schedule, the instalment amount is selected precisely to be equal to the interest accumulated on the initial principal, and the loan principal is expected to be paid in full at the end of the term.

Early payments on the interest only loans reduce the outstanding principal, thus resulting in less overall interest payable by the borrower. Although less total interest will be paid for the loans that are paid early, either in part or in full, an early return of the principal results in available pool capital that can be put into a new loan.

Late payments on interest only loans do not acquire additional interest until the end of the loan term. However a loan with total repayment made less than agreed by the schedule qualifies for a default after the grace period has passed.