Finder makes money from featured partners, but editorial opinions are our own.

Interest-only home loan calculator

Our interest-only calculator can help you work out how much you’ll pay each month on an interest-only home loan.

Our interest-only home loan calculator can help you make quick and calculations about your mortgage payments. It may help you set your budget, and figure out how you can save on interest charges by adjusting your loan term and repayment method.

The calculator can also be useful even if you already have a mortgage, by enabling you to calculate the total interest you’ll pay in the long run and helping you decide on a repayment period that would suit you. You can also use the calculator to figure out a mortgage reduction plan that would see you pay the loan much sooner, and get an understanding of how much you could save if you refinance your home loan.

Interest-only home loans

How to use the interest-only home loan calculator

An interest-only home loan calculator can help calculate different variables on the mortgage you intend to take so that you can customise your repayment to fit your income. The calculator is very easy to use and it gives you a clear picture of the total interest charges on your mortgage and how you can reduce your monthly repayments.

Here’s the information you need to input into the calculator to find out your monthly payments, total interest rates and total amount payable on the mortgage:

  • Loan amount. This is the principal amount you intend to borrow.
  • Interest rate. This is the rate used by the lender to calculate how much you’ll pay on your outstanding mortgage interest. In an interest-only home loan, you can usually pay off the interest on the mortgage without paying anything on the principal amount you borrowed for a period of five to ten years, after which you will need to pay off the principal amount within a shorter period or refinance to a new loan.
  • Loan term. This is the length of time within which you are allowed to repay interest charges without paying the principal amount on the loan. During this period, your monthly payments will be low but your actual mortgage amount will not reduce.
  • Loan type. The calculator allows you to choose whether to pay both the interest and principal or only service the interest charges for a certain term. Ensure you set this to "interest-only".

Why is it important to use an interest-only home loan calculator?

An interest-only home loan calculator is an important tool for anyone seeking to take out a mortgage, as it provides information that helps you decide how much to borrow, how much the interest rates on the mortgage will affect your monthly payments and other important factors to help you make an informed decision when taking up a home loan.

By calculating the total interest you are required to pay before your interest-only term is up, the calculator allows you to prepare yourself for repaying the mortgage by telling you what your interest-only monthly repayments will be. The calculator uses your starting mortgage balance and initial annual interest rate on the mortgage to calculate your monthly interest-only payments. This amount is calculated on the assumption that you do not prepay your principal amount.

With the help of the calculator, you can reset your repayment frequency so as to adjust your monthly repayments to what you can afford. This can help you free up more cash that you can use to invest in other projects.

An interest-only calculator is different from other mortgage calculators in that it allows you to choose your repayment type. Basically, you have the option of paying off your mortgage interest only for a certain period without repaying the principal, or you can service the interest charges only, making your monthly payments smaller.

The calculator can help you see how much you free up with the interest-only payments and show the effect of making extra principal payments on your home loan and how that improves your home equity. This can allow you to have greater control over your mortgage repayment and cash flow. In addition, all the monthly payments you make during the interest-only repayment term will be qualify as tax-deductible.

By allowing you to compare home loan options from different mortgage providers, an interest-only home loan calculator can help you choose a mortgage you can afford to pay without straining financially.

An interest-only home loan calculator is a handy tool when trying to take a mortgage. Many people who take an interest-only home loan do so with the intention of freeing up their money so that they can take advantage of other investment opportunities. Others take this type of loan because they do not have a stable income and making high monthly payments on their mortgage would be a financial strain.

Whatever your reason for taking out an interest-only loan, ensure you seek the proper financial advice before applying. Here are a few common questions many people ask when using an interest-only home loan calculator.


What information will the calculator give?

The calculator will help you calculate the interest-only payments required on a mortgage depending on its amount and loan term, and it will also show you the total interest payable over the life of the loan.

Can the calculator help me determine the amount I can borrow?

No, although you can get an estimate of your borrowing power by using the borrowing power calculator.

Can I calculate the effect of extra repayments?

An interest-only home loan calculator shows you how much you pay on your mortgage interest depending on the interest-only period. The calculator also shows you how much this amount can change should you make a lump sum repayment on the interest amount. This is because payments on the principal amount also decrease the interest payable and build up equity on your home.

Why you can trust Finder's home loan experts

We're free
You won't pay any more by taking out a home loan with us. Better still, we regularly run exclusive deals that you won't find on any other site – plus, our tables make it easy to compare loans.
expert advice
We're experts
We've researched and rated dozens of home loans as part of our Finder Awards. We provide unique insights and our in-house experts regularly appear on Sunrise, 7News and SBS News.
We're independent
Unlike other comparison sites, we're not owned by a third party. That means our opinions are our own and we work with lots of home loan lenders, making it easier for you to find a good deal.
We're here to help
Since 2014, we've helped 150,000+ people find a home loan by explaining the nitty gritty details simply and clearly. We'll never ask for your number or email. We're here to help you make a decision.

More guides on Finder

  • Home Loan rate rise calculator

    Use our simple rate rise calculator to work out how much extra interest you have to pay when interest rates rise.

  • Lenders mortgage insurance (LMI) calculator

    Finder's simple, free LMI calculator can help you estimate your lenders mortgage insurance premiums.

  • Capital gains tax calculator

    Estimate your CGT when selling an investment property or other asset with Finder's simple capital gains tax calculator.

  • Comparison rate calculator

    The comparison rate represents the actual cost of a home loan by taking into account its interest rate and any additional fees charged by the lender.

  • Home equity calculator

    Home equity can help you access extra financing from lenders to spend on things like home renovations or investment properties. Find out how you can calculate the equity in your home.

  • Calculate how long will it take to pay off my loan?

    Wondering 'how long will it take to pay off my loan?' Use our free calculator to see how long it will take to pay off your mortgage.

  • Lump sum repayment calculator

    Use a lump sum repayment calculator to see how much you can save in interest and fewer mortgage repayments. It's quick, free and easy to use.

  • Home loan extra repayment calculator

    Our extra loan repayment calculator helps you see how you could save big on interest. Free, fast and easy to use - calculate in 1 minute!

  • Mortgage repayment calculator

    Want to know how to calculate monthly repayments on your new mortgage? In five steps our free home loan repayment calculator crunches the numbers for you.

Ask a Question

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our 1. Terms Of Service and 6. Finder Group Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

2 Responses

    Default Gravatar
    RaeleneJune 17, 2014

    I am reading above, and am looking at the interest only variable loan for a couple of years before going to principle and interest, and was wondering.
    what if the calculator amount above is different to what the bank required you to pay, how do you know what you minimum required payment will be, especially if the interest rate increase, do you get told of the new min repayment amount, or if you do not get told what the repayment amount is then do you just keep paying the amount you were last told.

      MarcJune 18, 2014Finder

      Hi Raelene,

      Thanks for the question.

      The calculator above will only display an estimated loan repayment amount. You can see exactly what your repayments would be each month by requesting a key facts sheet from your lender before applying for a home loan. This will list all the details you need to know about your home loan.

      Your home loan statement will also show you the interest rate you’re paying and the amount due.

      I recommend getting in touch with a licensed mortgage broker. A broker can help you understand your financial position and they can leverage their panel of networks to find a lender that is more inclined to review your application.

      I hope this helps,

Go to site