How is interest Calculated?

Each month an average daily balance is calculated within the checking account. The average daily balance is subtracted from the principal loan balance. The interest rate is then applied to the net principal balance in the account.

How does it payoff principal if it is a 100% interest only loan?

Every month your recalculated loan balance becomes smaller due to the interest calculation. There is more cash left in your account, therefore reducing the loan balance further on the next month’s calculation. With a reduced balance there is less interest paid. Month after month it compounds to continue to accelerate you loan payoff.

Is there on-line banking?

Yes. Just like any other bank except the mortgage account is also displayed showing the interest calculation, principal account and more.

Is there a penalty for early payoff?

No. You may use your liquid equity as you please. The lower your loan balance, the lower your finance charges.