Interest-only payment
The monthly cost when nothing is repaid.
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Interest-only payment
$6,666.67
Per month — the balance never falls
- Full repayment payment
- $10,556.74
- Monthly difference
- $3,890.07
- Interest over the term
- $2,000,000.00
- Still owed at the end
- $2,000,000.00
How it works
Interest-only payments look cheap because the balance never falls. The comparison below shows the repayment figure next to it so the trade-off is obvious.
Example: 2,000,000 at 4% is 6,666.67 a month in interest, with the full 2,000,000 still owed at the end.
Questions people ask
When does interest-only make sense?
For short bridging periods, or for investors who plan to sell or refinance the asset. It needs a credible plan to clear the capital.
How much more does it cost overall?
A lot: you pay interest on the full balance for the whole term instead of a shrinking one, and still owe the original amount.
Can I overpay on an interest-only loan?
Often yes, and any overpayment reduces the balance and every future interest payment.
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