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Interest-Only Calculator

Calculate repayments during the interest-only period of your loan.

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Loan Details

$
%
18152330
5 years
151015202530
30 years

Calculation Results

Interest-Only Payment

$0.00

per month for 5 years

Principal & Interest Payment

$0.00

per month for 25 years

Total Interest-Only

$0

Total P&I Payments

$0

Total Repayment

$0

Payment Schedule

Interest-Only: 5 years
Principal & Interest: 25 years

About Interest-Only Loans

An interest-only loan is a type of loan where you only pay the interest for a specific period, typically 1-5 years, without making any principal repayments. After the interest-only period ends, the loan reverts to a principal and interest loan for the remaining term.

The formula for calculating interest-only payments is:

Monthly Payment = (Loan Amount × Annual Interest Rate) ÷ 12

Interest-only loans can offer lower initial repayments, but the total cost over the life of the loan is typically higher than a standard principal and interest loan. This is because you're not reducing the principal during the interest-only period, so you'll pay more interest overall.

Advantages of Interest-Only Loans:

  • Lower initial repayments
  • Potential tax benefits for investment properties
  • Flexibility for those with irregular income

Disadvantages of Interest-Only Loans:

  • Higher total interest paid over the life of the loan
  • No equity built during the interest-only period
  • Higher repayments after the interest-only period ends

For personalized advice on whether an interest-only loan is suitable for your situation, please contact our mortgage specialists.