Interest Only Mortgage Calculator
Calculate interest-only payments, compare them with fully amortizing payments, and estimate payment changes after the interest-only period ends.
This calculator compares interest-only payments with standard amortized mortgage payments and shows the payment jump after the interest-only period ends.
Showing first 100 rows of the interest-only payment schedule for better performance.
| # | Date | Payment | Principal | Interest | Balance |
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Terms Explained
Interest-Only Payment: A payment that covers only the monthly interest and does not reduce the loan principal during the interest-only period.
Standard Monthly Payment: The fully amortized mortgage payment that includes both principal and interest from the beginning.
Post-IO Payment: The new monthly payment after the interest-only period ends, when the remaining balance must be repaid over fewer years.
Total Interest: The total interest paid over the life of the loan.
Loan Term: The full repayment period of the mortgage, such as 15, 20, or 30 years.
Related Calculators
Interest Only Mortgage Calculator
An Interest Only Mortgage Calculator helps borrowers estimate their monthly payment when a mortgage allows them to pay only the interest portion for a specific period. This tool is useful for homeowners and investors who want to understand how an interest only loan structure works before the principal repayment begins.
This calculator can also be used as an Interest Only Loan Calculator or Interest Only Payment Calculator because the same mortgage formula is used to calculate payments and loan amortization.
In a standard mortgage, each monthly payment includes principal and interest, gradually reducing the loan balance. However, during an interest-only period, borrowers only pay the interest portion, which means the principal balance remains unchanged.
Using this Interest Only Mortgage Calculator, you can estimate:
- Monthly interest-only payment
- Standard mortgage payment
- Payment after the interest-only period
- Total interest paid over the life of the loan
Understanding these values helps borrowers compare different mortgage strategies and evaluate the long-term financial impact of interest-only loans.
How to Use This Interest Only Mortgage Calculator
Using this Interest Only Mortgage Calculator is simple and requires only a few inputs:
- Enter the loan amount (principal).
- Input the annual interest rate.
- Select the total loan term (for example 15 or 30 years).
- Choose the interest-only period.
- Click Calculate to generate results.
The calculator will instantly show:
- Interest-only monthly payment
- Standard mortgage payment
- Payment after interest-only period
- Estimated total interest
This makes it easier to understand how an interest only loan calculator compares to a traditional mortgage structure.
Mortgage Payment Formula Explained
The Interest Only Mortgage Calculator uses the same mortgage amortization formula used by banks and lenders to calculate loan payments.
Example Calculation
Suppose a borrower has the following mortgage:
Loan Amount: $300,000
Interest Rate: 6%
Interest-Only Period: 5 years
Monthly interest-only payment:
300000×0.0612=$1500
During the interest-only phase, the borrower pays $1,500 per month, but the loan balance remains $300,000.
Once the interest-only period ends, the payment increases because the remaining balance must be repaid within the remaining loan term.
Frequently Asked Questions
What is an interest-only mortgage?
An interest-only mortgage allows borrowers to pay only the interest portion of their loan for a certain period before full principal and interest payments begin.
How does an Interest Only Mortgage Calculator work?
An Interest Only Mortgage Calculator estimates the interest-only payment and calculates how payments change once the loan begins normal amortization.
Are interest-only loans risky?
Interest-only loans can have lower initial payments, but the payment may increase significantly after the interest-only period ends.
Who uses interest-only mortgages?
These loans are commonly used by real estate investors, short-term homeowners, and borrowers expecting higher future income.
Reference
Mortgage payoff calculations are based on standard amortization formulas commonly used in financial lending and explained by resources investopedia.com
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