Work out interest only loan instantly with clear inputs, formula shown and shareable results.
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.
Two phases
Phase 1: pay = P·r. Phase 2: pay = P·r/(1-(1+r)^-(n-io))
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.
Nothing is repaid during the interest-only phase, so the full balance keeps accruing interest for those months.
Borrowers with lumpy income, property investors, and buyers bridging a construction period.