Interest-Only Payment Calculator
Calculate monthly interest-only payments on loans
About this calculator
The Interest-Only Payment Calculator helps borrowers determine their monthly payment amount when only paying interest on a loan, without reducing the principal balance. This tool is particularly useful for investors, homebuyers considering interest-only mortgages, or anyone evaluating loan options where temporary lower payments are needed. By calculating interest-only payments, you can better plan your cash flow, compare different loan structures, and understand the financial impact of deferring principal payments during the interest-only period.
How to use
Enter your loan amount, annual interest rate, and loan term into the calculator. The tool will instantly compute your monthly interest-only payment by multiplying the principal by the monthly interest rate. Compare this result with traditional amortizing loan payments to understand the difference and make informed borrowing decisions.
Frequently asked questions
What is an interest-only payment?
An interest-only payment covers just the interest charges on a loan without reducing the principal balance, resulting in lower monthly payments but no equity buildup.
How long can I make interest-only payments?
Interest-only periods typically last 5-10 years for mortgages, after which payments increase to include principal and remaining interest over the loan term.
Are interest-only loans risky?
Yes, they carry risks including payment shock when the interest-only period ends, no equity buildup, and potential negative equity if property values decline.