Interest Only Mortgage Calculator

Figure out how your repayments and total costs change throughout the life of your loan, the repayments during the interest-only period, the repayments after the interest-only period ends and the total cost of an interest-only mortgage.

What is an interest-only mortgage?

An interest-only mortgage is a type of home loan that requires you to pay only the interest on your loan, not the loan principal itself. During this period, your monthly repayments are lower, which can make managing your finances easier in the short term. Once the period of interest-only payment is over, the costs will increase to include both principal and interest.

How to use the interest-only mortgage calculator?

Using the interest-only mortgage calculator is quick and simple. The calculator helps you estimate the amount you’ll pay during your interest-only term and also the amount you will pay after the period ends. Along with the total interest or fee payable and the total payments. To get your results, all you need to do is enter the loan amount, interest rate, term, repayment frequency, and the interest-only period and the loan fee.

Pros and Cons of Interest-Only Mortgages

Whether you opt for an interest-only mortgage or choose not to depends on your financial and personal circumstances. Before applying, consider the benefits and drawbacks carefully to make an informed decision.

Pros

• Lower initial repayments: During the initial period of loan repayment, you will only pay the interest, which means smaller monthly repayments and more short-term flexibility.
• Affordability: Lower repayments make it easier to manage your budget, especially if you’re early in your career or expecting future income growth.
• Investor advantage: With the extra cash flow saved, investors can use the amount to invest in another property while still recovering their loan repayments.

Cons

• Loan balance remains the same: Just because your initial repayments are lower doesn’t mean the entirety of your repayment is reduced. Once the interest-only period ends, you will need to pay the principal amount.
• Slower equity growth: Without principal payments, your home equity only grows if the property value increases.
• Minimum lenders: There aren’t many lenders that offer interest-only mortgages, and those that do may have stricter eligibility requirements.