📐Interest-Only Mortgage Calculator
Interest-only mortgages have low early payments that rise sharply later. See your interest-only payment and what it becomes once principal repayment begins.
Last updated: · Reviewed by The CalcWise Team
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How to use this calculator
- Enter the loan amount and interest rate.
- Set the total loan term and the length of the interest-only period.
- Calculate to see your interest-only payment and the higher payment that follows.
How it works
During the interest-only period you pay only the interest, so the balance does not fall and the payment is low. When that period ends, you must repay the full balance over the remaining years, which makes the payment jump significantly.
Interest-only loans can suit borrowers with irregular or rising income, but they carry real risk: you build no equity during the interest-only phase, and the later payment shock can be substantial. Understand the reset before choosing one.
Example: On a $350,000 loan at 6.5% with a 10-year interest-only period, you would pay about $1,896/month at first, then roughly $2,610/month once principal repayment begins.
Frequently asked questions
Why does the payment jump after the interest-only period?
Because you then repay the entire balance over fewer remaining years, so principal is added to the payment — often a large increase.
Do I build equity during interest-only payments?
No. Unless your home appreciates, the balance stays the same, so you build no equity from payments during that period.