Existing interest only mortgages in RightCapital can be added in the Net Worth section of the Profile (or the Net Worth step of the initial data entry process), by clicking Add Account > Loan:
Interest Only Mortgage Data Entry
After adding the loan, you will first want to change the Loan Type selection to 'Interest Only Mortgage'. This option allows you to specify an initial period during which only interest is paid, after which amortized payments will be made.
You can then specify the Initial rate that will be applied for the duration of the Initial period (in years) that you enter. Only interest payments will be reflected during this time. Once the initial period has passed, principal payments will begin and the Interest rate that you enter will be applied for the remainder of the Loan term.
To ensure accurate payment amounts each year, you will also need to enter the Original amount of the interest only mortgage, as well as the Origination year. Be sure to also specify the current Balance.
Unlike regular mortgage entries, interest only mortgages do not ask for a monthly payment amount. RightCapital will automatically calculate the amortized monthly payment amounts based on all of the inputs described above.
At the bottom of the data entry drawer, you will find an option for an Early payoff. Choosing an option here will generate a lump sum within the projections to fully pay off the mortgage in the year indicated:
In the lower right, you can use the Link to house field to select the property this mortgage is associated with. The 'Default' option will link the mortgage to the client's Primary Home. In plans with multiple property entries, like investment and vacation properties, you can link each mortgage to its corresponding property:
Additional Information
Interest Only Mortgage Cash Flows Location
Interest only mortgage payments can be tracked within the Retirement > Cash Flows > Summary page, by clicking into the Expenses column.
- Principal and interest for the Primary Home will be reflected in the Housing column.
- Payments for other properties will be reflected in the Rental and Vacation Home column.
Mortgage balances can be tracked as they are paid down within the Cash Flows > Net Worth page, by clicking into the Mortgages column.
Refinance an Interest Only Mortgage
You can model a refinance within a client plan using a New Loan income card. Within this card you will find a 'Refinance' field, in which you can choose the mortgage (or other loan) you would like to refinance. This will apply a one-time payment to the selected loan, and any excess income will be added to cashflows:
New loan cards can be added to the current plan within the Profile > Income section. You can also propose a refinance using the same card in the Retirement Analysis module, using the Action Items.
