BYTETOOLS

Interest-Only Mortgage Calculator

Model an interest-only mortgage: the low early payment, the jump when it converts to full repayment, and the extra interest it costs over the loan's life.

$1,625.00
Interest-only payment
$2,236.72
Payment after reset
$611.72
Payment shock
37.6%
Shock as a %

Versus a fully amortising loan

Loan typeEarly paymentLater paymentTotal interest
Interest-only then repayment$1,625.00$2,236.72$431,812.66
Fully amortising from day one$1,896.20$1,896.20$382,633.47

The interest-only structure costs about $49,179.19 more in interest over the full term, in exchange for 10 yr of lower payments up front.

Year-by-year balance

YearPhasePaymentInterest that yearYear-end balance
1Interest only$1,625.00$19,500$300,000
2Interest only$1,625.00$19,500$300,000
3Interest only$1,625.00$19,500$300,000
4Interest only$1,625.00$19,500$300,000
5Interest only$1,625.00$19,500$300,000
6Interest only$1,625.00$19,500$300,000
7Interest only$1,625.00$19,500$300,000
8Interest only$1,625.00$19,500$300,000
9Interest only$1,625.00$19,500$300,000
10Interest only$1,625.00$19,500$300,000
11Repayment$2,236.72$19,277$292,437
12Repayment$2,236.72$18,771$284,367
13Repayment$2,236.72$18,230$275,757
14Repayment$2,236.72$17,654$266,570
15Repayment$2,236.72$17,038$256,767
16Repayment$2,236.72$16,382$246,309
17Repayment$2,236.72$15,682$235,150
18Repayment$2,236.72$14,934$223,243
19Repayment$2,236.72$14,137$210,539
20Repayment$2,236.72$13,286$196,985
21Repayment$2,236.72$12,378$182,522
22Repayment$2,236.72$11,410$167,091
23Repayment$2,236.72$10,376$150,627
24Repayment$2,236.72$9,273$133,059
25Repayment$2,236.72$8,097$114,316
26Repayment$2,236.72$6,842$94,317
27Repayment$2,236.72$5,502$72,979
28Repayment$2,236.72$4,073$50,211
29Repayment$2,236.72$2,548$25,919
30Repayment$2,236.72$922$0

During the interest-only phase the balance does not fall at all, so no equity is built from payments. This model assumes the same fixed rate throughout; a real interest-only mortgage may also reset its rate at the same time as its payment, making the shock larger. Estimates only, not financial advice.

What is the Interest-Only Mortgage Calculator?

The ByteTools Interest-Only Mortgage Calculator models the two phases of an interest-only loan. During the interest-only period your payment is simply the balance multiplied by the rate and divided by twelve, so nothing is repaid and the balance does not move.

  • Interest-only payment from balance × rate ÷ 12
  • Re-amortises the full balance over the remaining term at reset
  • Payment shock shown in cash and as a percentage
  • Total interest compared against a fully amortising loan
  • Year-by-year phase, payment, interest and balance table with CSV export
  • Local, private calculation; estimates only, not advice

How to use the Interest-Only Mortgage Calculator

  1. 1

    Enter the loan amount, interest rate and the total loan term in years.

  2. 2

    Set the interest-only period — it must be shorter than the total term.

  3. 3

    Read the interest-only payment, the payment after reset and the payment shock in the stat row.

  4. 4

    Compare the interest-only structure against a fully amortising loan in the table below.

  5. 5

    Open the year-by-year table to see the flat then declining balance, and download it as CSV.

About the Interest-Only Mortgage Calculator

The ByteTools Interest-Only Mortgage Calculator models the two phases of an interest-only loan. During the interest-only period your payment is simply the balance multiplied by the rate and divided by twelve, so nothing is repaid and the balance does not move. When that period ends, the full balance has to be amortised over whatever term is left — and the payment jumps.

That jump is the number this tool puts front and centre. You get the interest-only payment, the payment after reset, the shock in both cash and percentage terms, and a comparison against a loan that amortises from day one so you can see exactly what the low early payments cost in extra interest.

A year-by-year table shows the flat balance through the interest-only years and the decline afterwards, and it downloads as a CSV. All figures are worked out in your browser with nothing uploaded. Estimates only, not financial advice.

Frequently asked questions

How does an interest-only mortgage work?

For an agreed period you pay only the interest that accrues each month, so the balance stays exactly where it started. After that period the loan converts to full repayment and the whole balance must be paid off over the remaining years, which makes the payment rise sharply.

How big is the payment jump after the interest-only period?

It depends on how long the interest-only phase ran and how many years are left. On a 30-year loan with a 10-year interest-only phase the payment typically rises by a third or more, because the same balance now has to clear in 20 years instead of 30. This calculator gives you the exact figure for your loan.

Do you build any equity with an interest-only mortgage?

Not from your payments. The balance is unchanged for the whole interest-only period, so any equity you gain comes purely from the property rising in value. If prices fall you can end up owing more than the home is worth.

Why would anyone choose interest-only?

Lower early payments can suit borrowers with irregular income, people who expect a large lump sum, or investors prioritising cash flow who plan to sell before the reset. The trade-off is more total interest and a payment shock later, both of which this tool quantifies.

Does the interest rate change at the reset?

It can. This calculator assumes one fixed rate throughout so you can isolate the effect of the structure itself. Many real interest-only products are also adjustable, in which case a rate rise lands at the same time as the payment reset and the shock is larger.

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