Interest Only Mortgage Calculator

You can use this interest-only mortgage calculator to figure out your monthly payments if you decide to take out an interest-only loan.  With an interest-only mortgage, you only pay interest charges.  The principal, or balance, of the loan is never reduced.  This keeps your monthly payments low, but increases the total interest charges over the life of the mortgage.

       
  Interest Only Mortgage Calculator  
  Total Home Loan Amount ($)  
  Annual Interest Rate (%)  
  Term of the Loan (Years)  
       
       
       
  Calculator Results:  
  Standard Monthly Payment ($ / Month)  
  Interest Only Mortgage Pymt. ($ / Mo.)  
  Monthly Savings ($ / Month)  
       
  Total Savings on Monthly Payments ($)  
       
  Interest Paid : Standard Loan ($)  
  Interest Paid: Interest Only Mortgage ($)  
       

Calculator Definitions

The variables used in our online calculator are defined in detail below, including how to interpret the results.

Total Home Loan Amount ($)

The total amount of money borrowed for this mortgage, also referred to as the principal of the loan.

Annual Interest Rate (%)

This is the annual interest rate on the mortgage.  This is not the APR, which takes into account other costs associated with the mortgage.

Term of the Loan (Years)

The term of the loan is the number of years over which the mortgage will be repaid.  The most common mortgage terms are 15, 20, and 30 years.  With an interest-only mortgage, you will need to refinance the loan at the end of its term since the principal, or balance, is never reduced.

Standard Monthly Payment ($ / Month)

This is the monthly payment necessary to repay the loan over its lifetime if you were to choose a conventional, or more "standard," mortgage.

Interest Only Mortgage Payment ($ / Month)

This is the monthly mortgage payment that is necessary for an interest only loan.  With this type of loan, the principal balance never declines, and is payable at the end of the loan's term.

Monthly Savings ($ / Month)

This is how much money you can save on your monthly payments by taking out an interest-only mortgage.

Total Savings on Monthly Payments ($)

This is how much money is saved over the term of the mortgage by making interest-only payments.  Keep in mind that since the principal balance never declines, the total loan balance would also be payable at the end of this mortgage's term.

On the one hand, interest-only mortgages allow you to save money on your monthly payments.  However, your total interest charges will be higher than a standard loan because the mortgage's principal never declines.

Interest Paid with Each Loan ($)

The interest paid with each loan type illustrates the downside of an interest-only mortgage.  Since the principal balance never declines, you are effectively borrowing more money over a longer period of time.  Therefore, the interest charges, or the cost of the mortgage, will be higher.


Interest Only Mortgage Calculator - Copyright © 2005 - 2015 Money-Zine.com (Last Reviewed on February 2, 2015)


Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor.  The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.