Interest-Only Mortgage Calculator
See your low interest-only mortgage payment during the initial period, then the jump to a higher payment when principal repayment begins. Free and accurate.
Calculator by Toolsloft ↗- Interest-only payment
- $1,500.00
- Amortizing payment
- $2,149.29
- Payment jump
- $649.29
This calculator shows the low payment during a mortgage's interest-only period and the higher payment once principal repayment kicks in, plus the jump between them. Use it to understand the payment shock that arrives when the interest-only term ends.
How this is calculated
The interest-only payment is loan amount times the monthly rate (annual rate divided by 12 then by 100) with no principal, and the later payment amortizes the full balance over the remaining years using P times r times (1+r)^n divided by ((1+r)^n minus 1).
How to use
- Enter the loan amount and annual interest rate.
- Enter the interest-only period and the total loan term in years.
- Read the interest-only payment, the later amortizing payment, and the jump between them.
Examples
- $300k at 6%, 10 IO / 30 yr:
IO $1,500 → amortizing $2,149.29 - Payment jump:
$649.29 once principal repayment starts
FAQ
- How is the interest-only payment calculated?
- It is the loan amount times the monthly rate (annual ÷ 12 ÷ 100). No principal is paid, so the balance stays the same during the interest-only period.
- Why does the payment jump later?
- After the interest-only period ends, the full balance must be amortized over the remaining years, so each payment now includes principal, making it larger.
- Is an interest-only mortgage cheaper overall?
- Lower payments early on mean you pay no principal during that time, so you carry the full balance longer and typically pay more interest over the life of the loan.