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Interest-Only Loan Calculator

From principal, annual rate and IO months, compute monthly interest, total interest and the balloon due at maturity.

Input Data

Principal
Annual Rate
%
Months
mo

Results

Interest paid each month.
16,666.67
Total interest over the IO period.
400,000
Principal repaid in full at maturity.
5,000,000

At a glance:An interest-only loan pays only interest monthly and does not amortise principal: monthly rate r = annual ÷ 12; monthly interest = principal × r; total interest = monthly interest × months; at maturity the full principal is repaid (balloon). Unlike amortising, early cash flow is low but principal never shrinks.

Formula

Monthly rate r = annual ÷ 12.

Monthly interest = principal × r.

Total interest = monthly interest × months; balloon = principal.

How to Use

  1. Enter the loan principal.
  2. Enter the annual rate and IO months.
  3. View monthly interest, total interest and the balloon at maturity.

Case Studies

5,000,000 at 4%, 24 months

Monthly rate = 4% ÷ 12 = 0.3333%.

Monthly interest = 5,000,000 × 0.003333 = HK$16,666.67.

Total interest = 16,666.67 × 24 = HK$400,000; balloon = HK$5,000,000.

FAQ

How does interest-only differ from amortising?

Interest-only pays a fixed interest each month and the principal never shrinks — low early cash flow but a large balloon at maturity. Amortising has higher monthly payments but repays principal gradually. Interest-only suits short-term bridging or those expecting a lump sum later.

What if I cannot repay the balloon?

That is the biggest risk of interest-only — the full principal is due at maturity. Common exits: convert to amortising, refinance, or sell the asset. Plan the source of repayment well ahead.

Is total interest lower than amortising?

Over the same term, interest-only total interest is usually higher, because the principal is untouched and interest accrues on the full amount throughout. Amortising's principal falls, so later interest keeps dropping.

Does a floating rate affect it?

Yes. If floating (e.g. HIBOR-linked mortgage), the monthly interest moves with the rate. This tool estimates at the fixed rate you enter; use the latest rate for the actual figure.

Can this represent a mortgage?

Interest-only is common in the early stage of mortgages, but full mortgages are usually amortising or stepped. For long-run comparison use the loan-payment (EMI) calculator; this tool focuses on the interest-only stage.

Related Tools

References

Content review: Calculatorism Science Team. Results are for reference only; please refer to the relevant authorities for the official figures.

Found a problem with the results?

If this calculator's result is wrong, or you have any question about the calculation logic, please let us know. You are viewing:Interest-Only Loan Calculator（/finance/loan-interest-only）。