Calculator
Interest Only Mortgage Calculator
Interest-only repayments are lower at the start because you're not paying down the loan. When the interest-only period ends, repayments switch to principal and interest over a shorter remaining term, so they rise sharply. This calculator shows both repayments and the difference.
Interest-only repayments are lower at the start because you aren't paying down the loan. This calculator shows your interest-only repayment, the principal and interest repayment that follows and the difference in total interest.
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How to use the interest only calculator
- Enter the loan amount, interest rate and loan term.
- Enter the interest-only period in years.
- Compare the interest-only repayment, the principal and interest repayment that follows and the total interest.
Things to know
Interest-only can suit some situations, such as an investment property, a bridging period or a short-term squeeze on cash flow. But the loan doesn't get smaller during that time. When the interest-only period ends, the full balance has to be repaid over fewer years, so repayments jump. That jump can be larger than people expect. Interest-only rates are also often higher than principal and interest rates.
Hot Tip: Look at the repayment after the interest-only period first. If that number doesn't fit your budget, interest-only only delays the problem.
Worked example (illustrative)
A $600,000 loan over 30 years with a five-year interest-only period shows a low repayment for five years, then a higher principal and interest repayment over the remaining 25 years. Compare the total interest with a principal and interest loan from day one.
What this calculator assumes
- The interest rate stays the same before and after the interest-only period.
- The loan reverts to principal and interest over the remaining term.
- Fees are not included.
Related guides
Frequently asked questions
The full loan must be repaid over the remaining term. On a 30-year loan with five years interest-only, the balance is repaid over 25 years, so principal and interest repayments are higher than they would have been from the start.
Investors often use them to manage cash flow. Owner-occupiers sometimes use them for a short period, such as during parental leave. Interest-only means paying more interest overall. Plan for the higher principal and interest repayment before the interest-only period ends so it doesn’t strain your budget.
Got a number? Let's see what it means for you
A calculator can tell you what the maths says. It can't tell you which lenders would accept your application, how they treat your income or whether a different structure would suit you better. Book a complimentary loan strategy session. We're based in Brisbane and help clients right across Australia, and in most cases you won't pay us a broker fee because we're paid by the lender you choose.
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