Interest Only Mortgage Calculator
See the payment during an interest only period, the jump when repayment starts, and the extra interest compared with a standard mortgage.
An interest only mortgage lets you pay just the interest for a set period. The balance does not fall during that time.
When the period ends, the full balance must be repaid over the years that remain. The payment rises sharply.
How it works
During the interest only years the payment is the balance times the monthly rate. After that the loan amortizes over the remaining term.
The calculator compares the total interest with a standard loan over the same term. The gap is the cost of the delay.
The formula
L = loan amount, r = annual rate as a decimal.
Tips
- Plan for the payment jump from day one. Many borrowers are caught out.
- Interest only loans suit people expecting a large future income or a sale, not people stretching to afford a home.
Frequently asked questions
Can I pay principal during the interest only period?
Usually yes. Any extra reduces the balance and the later payments.
Why is the total interest higher?
The balance stays at its full size for longer, so more interest accrues on it.
This is not financial advice. Nothing on this site is investment, tax, legal or financial advice of any kind.
The calculators give simplified estimates from the numbers you enter. They ignore taxes, fees, rate changes and real market returns, and they can be wrong.
Do not make financial decisions based on these results. Speak to a licensed financial adviser, accountant or lender before acting, and read the full disclaimer.