Interest-Only Loan Calculator
See your interest-only payment, the higher payment once repayment starts, and how the total cost compares with a fully amortizing loan.
Quick answer
An interest-only loan has two phases. First you pay only balance x monthly rate, leaving the balance unchanged. Then the full balance is amortized over the remaining months, so the payment is higher than on a loan amortizing from the start.
Interest-Only Loan Calculator
Must be shorter than the total term.
Interest-Only Payment
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Payment After Interest-Only
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Payment Shock
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Total Interest
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Fully Amortizing Payment
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Fully Amortizing Interest
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Extra Interest vs Fully Amortizing
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Year-by-Year Schedule
| Year | Payments (₹) | Interest (₹) | Principal (₹) | Balance (₹) | Fully amortizing balance (₹) |
|---|
Assumptions & method
- Interest-only payment = loan amount × annual rate ÷ 12. The balance does not change during this period.
- Payment after the interest-only period = P × r × (1 + r)^m ÷ ((1 + r)^m − 1), with r = annual rate ÷ 12 and m = months remaining. At 0% it is P ÷ m.
- Payment shock = payment after the interest-only period − interest-only payment.
- The comparison loan has the same amount, rate and total term but amortizes from the first payment.
- Interest accrues monthly on the balance, payments are made at the end of each month, and the rate is fixed. Fees, insurance and taxes are not included. Results are estimates, not advice.
Results are estimates based on the figures you enter. They are not guarantees and not financial advice.
How an interest-only loan works
An interest-only loan splits its term in two. In the first phase you pay only the monthly interest, so payments are small and the balance stays put. In the second phase the full balance is amortized over whatever months remain, which means a larger payment than a normal loan of the same length would have needed. This calculator shows both payments, the size of the jump, the total interest and a year-by-year balance next to a loan that amortizes from the start, so you can judge the trade-off between a low early payment and a higher lifetime cost.