Ontario Interest Only Payments

Interest Only Mortgages and Payments

Interest only mortgages are loans that do not contain the principal when payments are made. In Ontario Interest only payments are an option of an Interest only mortgage. For example, suppose a borrower takes out a mortgage loan amount of $200,000 at an interest rate of 6.5% scheduled to be paid over a 30 year period; amortized monthly payments would be $1,254. This amount comprises both principal and interest. The interest only monthly payments would be $1,083. From this illustration, it is clear that this option reduces a client’s payments by about $171 on a monthly basis.

Common Interest-Only Mortgages

Many lenders do not have an option that allows for interest only payments to be made during the term of the loan. Usually the loan is amortized during the term of the loan or mortgage.

The reason that some clients may want an interest only mortgage is to keep their monthly payments as low as possible. This could be for various reasons but commonly it is because of financial hardship or rebuilding after job loss or loss of income.

How to Compute an Interest Only Payment

Computing interest only payments is not very difficult. Most brokers, lenders or even lawyers have the interest, only payments calculator. However, if you want to do it yourself, then you can follow these steps;
(i) Take the unpaid loan balance and multiply it by the interest rate. This will give you your annual amount of interest.
(ii) Divide that value by 12 months. This will give you your equal monthly interest payments. That is how we got a value of $1,083 in the first example.

Who’s Best Suited for Interest Only Payments?

Not all lenders offer interest only payments. Depending on the qualification process, some lenders will go as high as 35 years amortization in order to help keep the monthly payment down, allowing you to pay the minimum amount of principal. This kind of mortgage arrangement may be recommended for first time home buyers who are not accustomed to making mortgage payments. This may give them a cushion for the first few years until they get used to it.

It is also ideal for people looking for a second mortgage to consolidate debt or who do not have a steady income, such as those who rely on commissions instead of a basic salary. Interest only payments are not recommended as a long term option as the principal will have to be paid off at some point.

Sometimes developers will also take out this kind of payment option as well as they want to keep their costs as low as possible while they develop a new project.

Cost of Ontario Interest Only Payments

Lenders may increase the interest rates on Interest only payments. However, this should not deter anyone from seeking out this kind of arrangement because the benefits associated with it often outweigh the disadvantages.

In Ontario interest only payments for a mortgage can be a great option depending on the situation that you may find yourself in.


  • “I can’t say enough how great your company has been. Matthew, thank you so much for making all of this process so easy for us. Our bank would not help us and you were amazing. Your company kept us informed every step of the way, and not once were we made to feel inferior like our bank did. The lawyers you set us up with were also awesome. I will highly recommend your company to anyone looking for mortgages. Thank you so much for getting creditors off or back and setting us on the right track. You guys are all amazing. I’m also so impressed that you came to us do to everything.”

  • “I just want to say ‘thank you’ to all of you, especially Matthew. The financial stress started affecting my health and my life. I could not sleep or focus at work. Now Expert Mortgage has given me control on my life by connecting me to a great lender. I have gone from being full of stress to being stress-free.”

    M.D, Mississauga, ON
  • “The bank would not lend money on our farm unless we showed them financial statements. Since my husband passed away, my son and I were struggling to keep the farm afloat. We just needed more time. The third mortgage you got us was the miracle we needed. You believed in us and we are so grateful. Thank you.”

    S.E. Orono, ON
  • “My pig farm always made good profit but last year was brutal for the whole industry. I fell behind on my mortgage. I showed FCC that my loss was just a temporary blip and asked them to give me some leeway but they started a foreclosure anyway. Thanks for getting me that private loan to buy me some time until I’m profitable again.”

    K.O., Hawkesbury, ON
  • “My ex-wife’s lawyer gave me 30 days to buy out her half of our house or have it put up for sale. I had no job and I was in bankruptcy. My bank manager laughed at me. I thought it was hopeless until I saw your flyer. I don’t know how you qualified me for the mortgage. You’re a miracle worker. Thank you!”

    J.R. Burlington, ON
  • “We were 6 months behind on our mortgage and the Sheriff was coming in 5 days to lock us out of our home. Every other mortgage broker said NO! I can’t believe you were able to get us a second mortgage that fast. You saved our home and I will refer everyone I know to you.”

    C.C., Oshawa, ON
  • “The bank refused to value my property based on all 211 acres. They said that their ‘rules’ limited it to 5 acres. Personally, I think that’s biased against farmers. I didn’t know that you had lenders who would value my property on all the acres. I finally got a large enough loan to tie all my debt into one payment. Thanks!”

    C.R., New Dundee, ON
  • “Every time I’d walk into a bank and say the word ‘farm’ the suit on the other side of the desk would look at me like I was from another planet! They had one agricultural ‘specialist’ for the area that was not much better. Then I went to 4 mortgage brokers before I stumbled on your company. Your rates were lower than the bank.”

    M.D., Bradford, ON
  • “Our credit was destroyed after we had a bad year. We needed to expand our facility. I explained to the bank that the expansion would make us profitable. I proved it on paper. They still declined us. I never heard of your ‘no questions asked’ private loans but you gave me $500,000 with no paperwork. That was a Godsend. My wife and I appreciate it from the bottom of our hearts and we won’t let you down.”

    R.Q., Woodville, ON
  • “Once again, a big thank you for arranging our new mortgage and being able to arrange for additional funds on closing. Matthew has worked hard for me over the last few years… I have a very high level of trust in Matthew and Expert Mortgage, and will surely recommend you to anyone I know who is in need. Thank You.”

    M.Z. Brantford, ON