Calculate interest-only mortgage payments, compare to fully amortizing loans, and see what your payment becomes after the IO period ends.
Saves $344.39/mo vs fully amortizing
| IO Period Payment | $2250.00/mo |
| Fully Amortizing (30yr) | $2594.39/mo |
| Monthly Savings (IO vs 30yr) | $344.39/mo |
| Payment After Year 10 | $3041.46/mo |
| Payment Jump at Recast | +$791.46/mo (+35.2%) |
| Total Interest (IO loan) | $599,949 |
| Total Interest (30yr fixed) | $533,981 |
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IO Payment = Loan Amount × Monthly Rate
Post-IO Payment = Amortize remaining balance over remaining term
An interest-only (IO) mortgage lets you pay only interest for a set period (typically 5–10 years). After that, payments increase to include principal repayment over the remaining term.
IO mortgages can make sense for investors expecting appreciation, short-term owners, or cash-flow-sensitive buyers. They're risky if property values don't rise and you owe the full principal at the end of IO period.
After the IO period, the loan recasts — you now must pay principal + interest over the remaining term. This significantly increases monthly payments. Prepare for 'payment shock.'
Not from payments. Equity only builds through property appreciation during the IO period. Unlike amortizing loans, IO borrowers owe the same amount at the end of the IO period as when they started.
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.