Interest-Only Loan Calculator
Work out the monthly payment during an interest-only period and how it jumps once repayment of principal begins.
How it works
IO payment = balance × (rate ÷ 12); later = standard amortization over the remaining term
During the interest-only phase you pay only the interest, so the balance never shrinks. When that phase ends, the full balance must be repaid over the remaining term, which sharply raises the payment.
Worked example
On $300,000 at 6.5%, the interest-only payment is $1,625/month; after a 5-year IO period it rises to about $2,024.
Frequently asked questions
Why choose interest-only?
It lowers early payments — useful for irregular income or short holding periods — but you build no equity during the IO phase.
What is payment shock?
It is the jump when the interest-only period ends and principal repayment begins. This calculator shows exactly how large it is.
Related calculators
This is an educational estimate, not financial advice. Confirm exact figures with your lender, employer or a licensed advisor.