A Moneybren tool
INTEREST-ONLY MORTGAGE CALCULATOR
Interest-only payments look cheap. This shows what the holiday really costs — the payment jump when it ends, and the extra interest over the life of the loan.
The loan
$
% pa
yrs
Banks typically allow up to 5 years for owner-occupiers, longer for investors.
yrs
The interest-only period costs you an extra
$0
Interest-only start
Standard P&I from day one
What you still owe
Year-by-year detail
| Year | IO route — payment/mo | IO route — balance | Standard — payment/mo | Standard — balance |
|---|
What interest-only really is. For the interest-only years you pay the bank’s interest and nothing else — you owe exactly as much at the end as the day you started. Then the full loan has to be repaid over what’s left of the term, so the payment jumps above what standard repayments would have been from day one. Assumes the rate stays constant and no fees; real loans refix along the way. Interest-only can still make sense — investors chasing deductibility or cash flow, or a genuine short-term squeeze — but it should be a decision, not a default.
How to use this calculator
Enter your loan, rate, how long you’d pay interest-only, and the total term. The calculator runs both paths — interest-only first vs standard principal-and-interest from day one — and shows the payment during the holiday, the jump when it ends, and the total extra interest the holiday costs.
Watch the chart: the gold line stays flat during the interest-only years while the green line falls from the start. That flat stretch is the whole story.
This is a tool only, and none of the information it produces is financial advice. Its accuracy is not guaranteed. Always check your own figures and get advice from your own financial professionals before making decisions.