Interest-Only Mortgage Calculator
Calculate interest-only mortgage payments for different payment frequencies. Compare interest-only vs. fully amortizing payments.
How it works
Interest-only payments cover only the loan interest, not principal. After the interest-only period, payments increase to pay both principal and interest.
Example
$400K loan at 6% = $2,000/month interest-only. After 5 years, payment jumps to $2,398/month to amortize remaining balance over 25 years.
FAQ
What happens after the interest-only period?
Payments increase significantly to pay both principal and interest over the remaining loan term. The loan must be fully paid by the maturity date.
Do I build equity with interest-only payments?
No, you only build equity through property appreciation or additional principal payments. The loan balance remains unchanged with interest-only payments.
Who should consider interest-only loans?
Borrowers expecting significant income increases, those with irregular income, or investors prioritizing cash flow over equity building.
What are the risks?
Payment shock when the interest-only period ends, no principal reduction, and higher total interest costs compared to traditional mortgages.
Are interest-only loans available today?
Yes, but less common since 2008. Usually available for jumbo loans, investment properties, or borrowers with significant assets and income.