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Interest Only Loan Calculator

Work out interest only loan instantly with clear inputs, formula shown and shareable results.

About Interest Only Loan Calculator

During an interest-only period the payment covers the interest charge only, so the balance does not fall. Principal must then be cleared over the shorter remaining term, which produces a step up in the payment and more total interest.

Formula

Two phases

Phase 1: pay = P·r. Phase 2: pay = P·r/(1-(1+r)^-(n-io))

io
Interest-only months

Worked example

With the default values below, Interest Only Loan Calculator returns Interest-Only Monthly Payment of $36,458.33. Change any input above and every figure here is recalculated in your browser.

Inputs used

Loan Amountminimum 0
5,000,000
Annual Interest Rateaccepts 0–100 %
8.75 %
Interest-Only Periodaccepts 1–15
3
Total Term In Yearsaccepts 2–40
20

Results

Interest-Only Monthly Payment
$36,458.33
Payment After The Interest-Only Period
$47,174.46
Payment Increase At Reset
$10,716.12
Total Interest Over The Term
$5,936,089.36

Step by step

  1. 1Values used
  2. 2Two phases
  3. 3Interest-Only Monthly Payment= 36,458.33
  4. 4Payment After The Interest-Only Period= 47,174.46
  5. 5Payment Increase At Reset= 10,716.12
  6. 6Total Interest Over The Term= 5,936,089.36

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or fees or charges into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates. Lenders apply their own rounding, fees and eligibility rules, and rates change. This is not financial advice — confirm the numbers with your lender.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates. Lenders apply their own rounding, fees and eligibility rules, and rates change. This is not financial advice — confirm the numbers with your lender.

Frequently Asked Questions

Why is total interest higher?

Nothing is repaid during the interest-only phase, so the full balance keeps accruing interest for those months.

Who uses interest-only loans?

Borrowers with lumpy income, property investors, and buyers bridging a construction period.

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