Interest Only Mortgage Calculator
Calculate monthly payments and total interest for an interest-only mortgage loan. Understand how interest-only periods work and plan your finances.
Published by:
isCalculator Editorial Team
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How to use this tool?
This calculator determines the monthly payment for an interest-only mortgage. During the interest-only period, you pay only the interest, and the principal balance remains unchanged.
- Enter Loan Amount ($): The total amount borrowed (e.g., 300000 for $300,000).
- Enter Annual Interest Rate (%): The yearly interest rate (e.g., 4.5 for 4.5%).
- Enter Interest-Only Period (Years): How long you will make interest-only payments (e.g., 5).
- Click "Calculate": The results will appear below.
Results explained:
- Monthly Payment: The amount due each month (interest only).
- Total Interest Paid: The total interest over the interest-only period.
- Total Payment: Same as total interest (since no principal is paid).
Note: All inputs must be positive numbers. The calculator uses the formula: Monthly Payment = (Loan Amount × Annual Rate / 12).
Previous Results
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Frequently Asked Questions
An interest-only mortgage is a loan where you pay only the interest for a set period, typically 5-10 years. During this period, your monthly payments are lower because you're not paying down the principal.
The monthly payment is calculated by multiplying the loan amount by the monthly interest rate (annual rate divided by 12). For example, a $300,000 loan at 4.5% annual rate gives a monthly payment of $1,125.
After the interest-only period, the loan typically converts to a standard amortizing loan, and your monthly payments increase significantly because you start paying both principal and interest.
