Interest Only Loan Calculator

Interest-Only Loans Explained

An interest-only loan allows you to pay only the interest for a specified period (typically 5-10 years), after which you begin paying both principal and interest. While initial payments are lower, payments increase significantly once the interest-only period ends.

When Interest-Only Loans Make Sense

• Investment properties: Maximize cash flow while the property appreciates
• Short-term home ownership: Plan to sell before principal payments begin
• Variable income professionals: Commission-based workers, seasonal employees
• Business owners: Reinvest capital into the business during the IO period

The Risks

The biggest risk is payment shock when the interest-only period ends. Your monthly payment can double or triple once principal payments begin. Always calculate the fully amortizing payment before choosing an interest-only loan to ensure you can afford it long-term.