Interest Only Loan Calculator
Calculate payments where you only pay interest for a period.
What is an Interest-Only Loan?
An interest-only mortgage allows you to pay only the interest on the loan for a set period (usually 5-10 years). After that, the monthly payment increases significantly as you begin paying down the principal.
Calculation Steps
- <strong>IO Phase:</strong> Payment = (Loan Amount × Annual Rate) / 12.
- <strong>Repayment Phase:</strong> The remaining loan balance is amortized over the remaining term (e.g., 25 years left on a 30-year loan).
Loan FAQs
Is interest-only a good idea?
It can be useful for investors maximizing cash flow or buyers expecting a large income increase. However, it carries the risk of 'payment shock' when the principal payments kick in.