Interest-Only Mortgage Calculator
Interest-Only Payment
Calculate interest-only vs fully amortizing payments
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Formula
IO Payment = P x r. After IO: M = P[r(1+r)^n] / [(1+r)^n - 1] for remaining term
Frequently Asked Questions
What is an interest-only mortgage?
An interest-only mortgage lets you pay only interest for a set period (typically 5-10 years). After that, you pay principal and interest over the remaining term, resulting in higher payments.
Why choose interest-only?
Interest-only mortgages offer lower initial payments, freeing cash for investments or other uses. They suit borrowers who expect higher future income or plan to sell before the IO period ends.
What are the risks?
You build no equity during the IO period, payments jump significantly afterward, and you pay more total interest. If home values decline, you could owe more than the home is worth.
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