Interest-Only Mortgage Calculator

Loan Details

Cannot exceed 10 years or loan term

Additional Monthly Costs

About This Interest-Only Mortgage Calculator

Our interest-only mortgage calculator helps you compare interest-only and traditional mortgage payments. It shows you:

  • Monthly payments during the interest-only period
  • Payment changes after the interest-only period ends
  • Side-by-side comparison with traditional mortgage payments
  • Visual representation of loan balance over time
  • Total monthly costs including taxes, insurance, and HOA fees

Understanding Interest-Only Mortgages

Advantages

  • Lower initial monthly payments
  • More cash flow flexibility
  • Potential tax deductions on interest
  • Good for property investors
  • Useful for variable income earners

Disadvantages

  • No equity building during IO period
  • Higher payments after IO period
  • Potentially higher interest rates
  • Risk of negative equity
  • May be harder to qualify for

Payment Structure

Interest-Only Period

  • Only interest is paid
  • Principal remains unchanged
  • Lower monthly payments
  • Typically 5-10 years

After IO Period

  • Principal and interest payments begin
  • Higher monthly payments
  • Shorter amortization period
  • Rapid equity building starts

Traditional Mortgage

  • Consistent payments throughout
  • Gradual equity building
  • Predictable loan payoff
  • Usually lower interest rates

Who Should Consider an Interest-Only Mortgage?

Good Candidates

  • Real estate investors planning to sell/refinance
  • Professionals expecting significant income growth
  • Seasonal workers with variable income
  • Homebuyers in appreciating markets
  • Those needing short-term payment flexibility

May Not Be Suitable For

  • First-time homebuyers
  • Those planning long-term occupancy
  • Fixed-income borrowers
  • Risk-averse homebuyers
  • Those prioritizing equity building

Important Considerations

  1. Payment Shock: Be prepared for significantly higher payments after the IO period
  2. Market Conditions: Consider home value trends in your area
  3. Exit Strategy: Have a plan for when the IO period ends
  4. Total Costs: Factor in all housing expenses beyond the mortgage
  5. Qualification: Expect stricter lending requirements

Important Notes:

  • Results are estimates based on the information you provide
  • Interest rates may be higher for IO loans
  • Not all lenders offer interest-only mortgages
  • Consider consulting a mortgage professional
  • Tax implications should be discussed with a tax advisor