Interest Only Calculator

There are a number of benefits to using an interest only calculator. If you’re trying to figure out if an interest only home loan is right for you, this calculator could give you a head start on potential repayment options.

If you’re a first home buyer looking to build, a property investor or someone in need to reducing their initial repayments, the interest only calculator will help you understand what your mortgage interest payments will be for the duration of the interest only period.

The calculator is used to help you determine what your monthly repayments would be if you had an interest only home loan structure. You’ll quickly see by how much your repayments will be reduced by if you pay only the interest amount, because you are not paying off the principal amount.

It’s important to note that with this type of home loan, the principal balance of your mortgage remains the same. No repayments made under an interest only loan will affect the principal amount, so when you do switch to a principal and interest structured loan, your mortgage repayments are likely to be considerably more.

This is something to keep in mind as you explore your home loan options.

Compare Interest Only Home Loans


The Pros and Cons of an Interest Only Mortgage


Whilst an interest only mortgage can be helpful on one side, there are some pros and cons that you should be aware of if you’re considering an interest only home loan:


  • Provides access to extra money for development or construction after the property is purchased
  • Minimises upfront repayments that are made
  • Provides cash flow flexibility


  • No reduction of the overall principal amount
  • You are delaying the payment of the debt once the interest only term is up
  • Can potentially cause problems if no equity is gained on your property during the interest only period


Understanding the Figures


An interest only home loan can greatly reduce the amount that you pay back on a month-by-month basis, although in the end you will be repaying more interest on the principal amount, once you switch to a normal repayment schedule.

For example, on a $300,000 property, with a principal and interest structured home loan, you would pay back about $1,430.00 per month on a best variable rate.

In comparison, on an interest only mortgage, you are likely to only pay $997.50 per month.

If you look over the 30 years of the duration of the loan, you are looking at paying $214,986.50 in interest through the ‘principal + interest’ loan and $359,100 on an interest only loan.

From these figures it is easy to see that the initial benefits of an interest only loan can come at an expense.

Using an interest only calculator does provide opportunities for new home owners, giving them the chance to see how the extra money could be used for renovations or for purchasing a new build home.

At Australian Credit and Finance, our team of home loan experts can help you determine if an interest only home loan is right for you. Call us today to discuss your mortgage needs.

Talk to our friendly team of Australian Credit and Finance mortgage experts who can help you navigate your way through the process of buying a home, investing in property or refinancing your home loan. Call us today on 1300 735 557 to discuss your interest only home loan options.