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Interest Only Mortgage

Explore the benefits and costs of an interest-only mortgage with the Interest-Only Mortgage Calculator. This tool helps you understand how much your monthly payments will be during the interest-only period and what to expect once principal repayments begin, empowering you to plan your finances smartly.




Interest-Only Mortgage Calculator



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What is Interest-Only Mortgage Calculator

An Interest-Only Mortgage Calculator is a specialized financial tool designed to help borrowers calculate their monthly payments during the interest-only phase of a mortgage. Unlike traditional mortgages where you pay both principal and interest from the start, an interest-only mortgage lets you pay only the interest for an initial set period—typically 5 to 10 years. This can lower your monthly payments initially, but eventually, you’ll start paying down the principal, often leading to higher payments later.

This calculator is ideal for homeowners who want to understand how their payments will change over time and assess whether an interest-only loan suits their financial situation. It offers clarity on the short-term affordability and long-term repayment obligations.




How it works

Interest-Only Mortgage Calculator Works

The Interest-Only Mortgage Calculator works by taking your loan amount, interest rate, and the length of the interest-only period to determine the monthly payments you will make during that phase. Since you’re only paying the interest, your monthly payment will be calculated as the loan amount multiplied by the interest rate, divided by 12 months.

After the interest-only period ends, the calculator can also help you estimate what your payments will look like when you begin repaying the principal along with interest for the remainder of the loan term. This allows you to see the payment increase ahead of time and plan your budget accordingly. By comparing the interest-only payments to traditional mortgage payments, you get a full picture of how this loan structure impacts your cash flow over time.



Frequently Asked Questions

What is an interest-only mortgage Toggle
It’s a loan where you pay only the interest for a set initial period, delaying principal payments until later in the loan term.
Who benefits from an interest-only mortgage Toggle
Borrowers who expect their income to increase in the future or plan to sell or refinance before the principal repayment phase may find this beneficial.
Are interest-only payments lower than traditional mortgage payments Toggle
Yes, during the interest-only period, payments are significantly lower since you’re not repaying principal.
What happens after the interest-only period ends Toggle
Your monthly payments will increase because you start repaying both principal and interest, often over a shorter remaining loan term.
Can this calculator help me compare interest-only vs traditional mortgage payments Toggle
Yes, it shows you how monthly payments differ during and after the interest-only period, helping you make an informed choice.