Interest-Only Loan

The Interest-Only Loan Calculator models loans where you pay only interest for an initial period before switching to full principal-plus-interest payments. This structure is common in certain mortgages and commercial loans. During the interest-only phase your payments are lower, but your principal balance does not decrease. When the loan converts to full amortization, payments jump significantly because the same principal must now be repaid over a shorter remaining tenure. This calculator shows the payment in each phase, the total cost comparison versus a standard amortizing loan, and the payment shock at conversion. Use it to decide whether the initial payment relief justifies the higher long-term cost.