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 Amortization Software > FREE > Mortgage Calculators

Interest-Only-Loans Online Calculator
FREE Online Calculator

A mortgage is “interest only” if the monthly payment does not include any repayment of principal for some period.  The payment consists of interest only.  At the end of the term, the initial loan balance is paid off in one-lump sum.

Interest Only Loan Payments are very easy to calculate. Since the borrower is not paying any principal, and there is no amortization, you can use simple math to calculate your monthly loan payment.

Consider a 10-year, interest-only loan of $100,000 at 6.25%.

Step 1: Calculate Total Annual Interest

Your total annual interest would be $100,000 (Loan Amount) X .0625 (Interest rate in Decimals)

= $6,250 Annual Interest Owed

Step 2: Calculate Total Monthly Payment

Divide the annual interest by 12 (number of months in a year) to determine your monthly payment.

$6,250 (Annual Interest) divided by 12 (number of months)

= Total Monthly Payment of $520.84

That's it !

Otherwise, the fixed-rate, amortization payment would be $615.72, of which $94.88 is principal.

The online calculator below determines the monthly payment amount for a fixed-rate and interest-only loan to help you comparison the two loan amounts.

Change the loan amount to the right and then click Calculate.







Mortgage Calculator
Loan Amount $ 
Annual Interest Rate  %
Number of Years 

Total Number of Payments 
Monthly Payment
Amount $ 

*Interest-Only Monthly
Payment Amount $

Back in the twenties, interest-only loans were the norm.  Borrowers typically refinanced at term, which worked fine so long as the house didn’t lose value and the borrower didn’t lose their job. But the depression of the thirties caused a large proportion of these loans to go into foreclosure.  Lenders stopped writing them and have never brought them back.  They want loans that eventually amortize.  Hence, the interest only loans of today are interest only for a specified period, such as 5 years.  At the end of that period, the payment is raised to the fully amortizing level.  In such case, the new payment will be larger than it would have been if it had been fully amortizing at the outset.

Interest only mortgages are for borrowers who want a lower initial payment, and have some confidence that they will be able to deal with a payment increase in the future.

We ask that if you like this software, that you add one of the following links to your website:

Amortization Software   Generate fixed, variable or interest-only amortization schedules.

Mortgage Calculators   Track loans with ease. Add, edit, or delete to manage irregular payments.



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