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During an interest-only period, your payment covers interest alone and the principal balance never goes down — once that period ends, the full original balance must be paid off over whatever time remains, causing a payment jump.
This calculator finds both your interest-only payment and the higher payment that follows.
How it works
Enter the loan amount, rate, the length of the interest-only period, and the total loan term. The calculator computes the interest-only payment directly from the rate, then amortizes the full original balance over whatever term remains after the interest-only period ends.
- Enter loan amount.
- Enter annual interest rate (%).
- Enter interest-only period (years).
- Enter total loan term (years).
- Click Calculate to see your results.
Examples
$400,000 loan, 10-year IO period
A $400,000 loan at 6.5% with a 10-year interest-only period (30-year total term) has an interest-only payment of about $2,166.67/month, jumping to about $2,982.29/month afterward.
Who should use it
- Evaluating an interest-only mortgage offer before committing to it.
- Planning cash flow around an existing interest-only loan's upcoming payment increase.
Industry applications
- Mortgage lending and real estate
- Personal financial planning
Advantages
- Shows the concrete dollar jump between the interest-only payment and the payment that follows.
- Uses the exact standard amortization formula for the post-interest-only period, not an estimate.
Limitations
- Doesn't model optional extra principal payments some interest-only loans allow during the IO period.
Common mistakes to avoid
- Budgeting only around the initial low interest-only payment without planning for the significant jump once that period ends.
- Assuming the balance decreases during the interest-only period — it doesn't, by design.
Best practices
- Before choosing an interest-only mortgage, calculate the post-interest-only payment (as this tool does) and confirm it's genuinely affordable under your future expected income, not just your current one.
Tips
- If you can afford it, voluntarily paying extra toward principal during the interest-only period (even though it's not required) directly reduces the balance that must be amortized later, softening the eventual payment jump.