See the low interest-only payment now and the larger principal & interest payment that begins once the interest-only period ends.
How the Interest-Only Mortgage Calculator works
During the interest-only period you pay only the monthly interest, so the balance doesn't fall. The calculator also shows the higher principal-and-interest payment that begins afterward.
Example calculation
On a $400,000 loan at 6.75%, interest-only is about $2,250 a month, while the later P&I payment jumps to roughly $2,594 once amortization begins.
Tips for using the Interest-Only Mortgage Calculator
- You build no equity during the interest-only phase.
- Plan for the payment jump before it hits.
- Best for disciplined borrowers with irregular income.
Interest-Only Mortgage Calculator — frequently asked questions
- Do I build equity?
- Not during the interest-only period — the balance does not go down unless you make extra payments.
- Who is it for?
- Borrowers with irregular income who understand the payment will rise sharply later.
- Why choose interest-only?
- Lower initial payments for cash-flow flexibility, used cautiously by some investors and high earners.
- Can I pay principal voluntarily?
- Yes — extra principal during the IO period reduces the future payment jump.
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