Our interest-only mortgage calculator works a lot like a typical mortgage payment calculator, except it shows you two monthly repayment estimates instead of just one:
Interest-only repayments are your principal and interest payments minus the principal. Once your interest-only period ends, you'll be required to pay principal and interest for the remaining life of the loan.
To use the calculator, all you need to do is input:
The loan balance chart gives you a visual breakdown of the difference between the total balance you owe and how much more you'll end up paying in interest.
This interest-only mortgage calculator operates on a series of assumptions, including:
Use our interest-only mortgage calculator as a guide to help you estimate what your monthly payments will look like with an interest-only home loan. The actual number you get from a financial institution may significantly vary from the result you get with our calculator.
If you take out an interest-only loan, it means that your repayments will only need to cover the interest on the amount borrowed for a limited time. During this interest-only period (such as the first five years), none of your repayments will go towards paying back the sum you borrowed to buy a home.
Once the interest-only period ends, your home loan will switch back to normal, and you'll need to make higher repayments to cover the principal + interest. For example, for a standard loan term of 30 years, you would only need to pay interest fees for the first five years before you needed to start making repayments on the principal amount you borrowed.
As with any financial product, an interest-only home loan has its own advantages and disadvantages. Depending on your circumstances, having cheaper initial monthly payments during the interest-only period can give you the breathing room you need to ensure your home loan repayments are manageable.
However, the interest-only period also means it will take longer for you to start paying back the loan amount and generate equity in your home. If you're unsure which option is most suitable for you, you should consider seeking professional financial advice.