Interest-Only Home Loan Calculator
This interest-only home loan calculator compares repayments during the interest-only period with the principal-and-interest repayment after it ends. It also compares total interest and the balance left when the interest-only period ends with a principal-and-interest loan from today.
Loan details
360 months is 30 years.
60 months is 5 years and 120 months is 10 years. Enter 0 for none, or the full term to leave the balance due at the end.
Interest rates
Annual rate during the interest-only period. The starting rates are hypothetical.
Annual principal-and-interest rate once the interest-only period ends. The comparison loan uses this rate from today.
Results
Correct the marked input to calculate repayments.
Interest-only repayment
$3,000.00
Each repayment until the period endsRepayment after reversion
$3,865.81
Principal and interest over the remaining termTotal interest
$739,741.91
Interest-only period, then principal and interestExtra interest
$44,710.56
Compared with principal and interest from todayEach repayment rises by $865.81 (28.9%) after 60 monthly interest-only payments. The balance is still $600,000.00 then, compared with $558,326.42 on principal and interest from today. Total interest is $44,710.56 more than principal and interest.
Balance over time
The interest-only balance stays flat until reversion. The axis counts years from today.
The starting balance is $600,000.00. The interest-only loan still owes $600,000.00 after 60 payments, compared with $558,326.42 on principal and interest. Both loans are repaid after 360 payments.
Compare with principal and interest
The comparison loan repays principal and interest from today over the same term, at the rate after reversion.
| Measure | Interest-only loan | Principal and interest |
|---|---|---|
| Repayment now | $3,000.00 | $3,597.30 |
| Repayment after reversion | $3,865.81 | $3,597.30 |
| Balance when interest-only ends | $600,000.00 | $558,326.42 |
| Interest paid by then | $180,000.00 | $174,164.42 |
| Total interest | $739,741.91 | $695,031.35 |
| Total repayments | $1,339,741.91 | $1,295,031.35 |
Balance at each year end
Rows also mark the payment where the interest-only period ends. CSV lists every repayment, the rate change and any balance due with the final payment.
| Time from today | Repayment type | Interest-only loan | Principal and interest |
|---|---|---|---|
| Year 1 | Interest only | $600,000.00 | $592,631.97 |
| Year 2 | Interest only | $600,000.00 | $584,809.51 |
| Year 3 | Interest only | $600,000.00 | $576,504.58 |
| Year 4 | Interest only | $600,000.00 | $567,687.41 |
| Year 5 | Interest only | $600,000.00 | $558,326.42 |
| Year 6 | Principal and interest | $589,319.75 | $548,388.07 |
| Year 7 | Principal and interest | $577,980.77 | $537,836.73 |
| Year 8 | Principal and interest | $565,942.42 | $526,634.59 |
| Year 9 | Principal and interest | $553,161.57 | $514,741.56 |
| Year 10 | Principal and interest | $539,592.43 | $502,114.97 |
| Year 11 | Principal and interest | $525,186.37 | $488,709.59 |
| Year 12 | Principal and interest | $509,891.77 | $474,477.41 |
| Year 13 | Principal and interest | $493,653.82 | $459,367.42 |
| Year 14 | Principal and interest | $476,414.38 | $443,325.47 |
| Year 15 | Principal and interest | $458,111.63 | $426,294.09 |
| Year 16 | Principal and interest | $438,680.02 | $408,212.25 |
| Year 17 | Principal and interest | $418,049.90 | $389,015.16 |
| Year 18 | Principal and interest | $396,147.35 | $368,634.05 |
| Year 19 | Principal and interest | $372,893.91 | $346,995.87 |
| Year 20 | Principal and interest | $348,206.24 | $324,023.09 |
| Year 21 | Principal and interest | $321,995.91 | $299,633.40 |
| Year 22 | Principal and interest | $294,168.96 | $273,739.41 |
| Year 23 | Principal and interest | $264,625.72 | $246,248.35 |
| Year 24 | Principal and interest | $233,260.32 | $217,061.69 |
| Year 25 | Principal and interest | $199,960.38 | $186,074.86 |
| Year 26 | Principal and interest | $164,606.55 | $153,176.82 |
| Year 27 | Principal and interest | $127,072.17 | $118,249.72 |
| Year 28 | Principal and interest | $87,222.79 | $81,168.39 |
| Year 29 | Principal and interest | $44,915.55 | $41,799.95 |
| Year 30 | Principal and interest | $0.00 | $0.00 |
Each phase keeps its entered rate, and interest compounds at the repayment frequency. The comparison loan repays principal and interest from today at the rate after reversion.
Months convert to 12, 26 or 52 repayments a year, and a partial period rounds up to a whole repayment. Money rounds to cents each period, and the final repayment clears the remaining balance.
Results exclude fees, offset balances and extra repayments. PDF opens your print dialog. CSV includes every repayment. Your entries stay in this browser.
Interest-Only Payments
An interest-only repayment is the loan balance multiplied by the interest rate for one repayment period. Divide the annual rate by 12 for monthly repayments, 26 for fortnightly or 52 for weekly. For a $600,000 balance at 6% a year, the monthly rate is 0.5%, so each monthly repayment is $3,000.00.
These repayments cover only the interest charged in each period. None of the money reduces principal, so the balance is still $600,000.00 when the interest-only period ends. Moneysmart's guide to interest-only home loans also notes that the amount borrowed doesn't reduce during this period.
A lender can charge a higher rate during the interest-only period than on principal and interest, so enter each phase's rate separately. When the interest-only period covers the whole remaining term, no repayment reduces principal. The full balance is then due with the final repayment, and the results show that amount.
Repayments After Reversion
When the interest-only period ends, the loan reverts to principal-and-interest repayments. The calculator amortises the unchanged balance over the payments left in the term, not over a new full term. In the example, five interest-only years leave 25 years of a 30-year term, or 300 monthly payments.
The repayment formula is A = P × r ÷ (1 − (1 + r)−n). P is the balance at reversion, r is the reverting rate per period and n is the number of payments left. At 6%, the repayment after reversion is $3,865.81. Each repayment rises by $865.81, an increase of 28.9%.
Spreading the same balance over a full 30-year term would give a lower repayment of $3,597.30. That figure assumes 360 payments, but only 300 remain after five interest-only years.
A rate change at reversion moves the new repayment again. If the rate rises to 6.5% when the interest-only period ends, the repayment becomes $4,051.24. Enter a different rate after reversion to show a client both changes together.
Interest-Only Versus Principal and Interest
An interest-only loan costs more in interest over the same term when both phases use the same rate. In the worked example, total interest is $739,741.91 with five interest-only years. A principal-and-interest loan from today costs $695,031.35 in interest, so the interest-only path adds $44,710.56.
Compare both loans at the end of the interest-only period. The interest-only loan has paid $180,000.00 in interest and still owes $600,000.00. The principal-and-interest loan has paid $174,164.42 in interest and owes $558,326.42, so it has already repaid $41,673.58 of principal.
The comparison loan uses the rate after reversion for its whole term, at the same repayment frequency. A higher interest-only rate widens the gap. At 6.5% for the first five years, total interest on the interest-only loan rises to $754,741.91.
Moneysmart's interest-only mortgage calculator also compares the two repayment types on the same amount, rate and repayment frequency. This calculator adds a separate rate for each phase and leaves out fees. To model extra repayments on a principal-and-interest loan, use the mortgage calculator.