Payment After IO Period
$2,149.29
Interest Only Calculator
Compare interest-only payments to fully amortizing payments after the IO period.
Interest-Only Payment
$1,500.00
Payment Increase
$649.29
IO Period
10 yrs
Remaining Amortization
20 yrs
How to use the Interest Only Calculator
The Interest Only Calculator is free and runs entirely in your browser — no sign-up, and nothing you enter leaves your device. It opens pre-filled with a realistic example, so you can see how it works before replacing any figure with your own; the results update as you type. Press Calculate to refresh the result panel, or Reset to return to the example.
The inputs it asks for:
- Loan Amount — a dollar amount.
- Annual Interest Rate — a percentage (enter 6 for 6%).
- Interest-Only Period (yrs) — a number.
- Total Loan Term (Years) — a number.
The formula
During the interest-only period you pay just the monthly interest, so the balance never falls. When that period ends, the full original balance must amortize over the years left — a payment jump the calculator makes explicit:
IO payment = Balance × rate ÷ 12
Later payment = amortize(Balance, rate, remaining years)- Balance
- the loan amount, unchanged through the interest-only period
- remaining years
- total term − interest-only period
Because no principal is paid during the IO period, the later payment amortizes the whole balance over a shorter span — so it is markedly higher than a normal payment would have been. Paying only interest builds no equity.
Worked example
Using the example values — Loan Amount $300,000.00, Annual Interest Rate 6%, Interest-Only Period (yrs) 10, Total Loan Term (Years) 30 — the Interest Only Calculator returns a Interest-Only Payment of $1,500.00. It also reports Payment After IO Period ($2,149.29), Payment Increase ($649.29), IO Period (10 yrs).
Prefer your own numbers? Change any field above and this recomputes instantly.
Key terms
- Interest-only period
- An opening phase where payments cover interest only and the balance holds steady.
- Payment shock
- The jump when the IO period ends and principal repayment begins.
- Amortization
- Repaying principal and interest together in level installments.
Frequently asked questions
Do I owe less after the interest-only period?
No — the balance is unchanged, because you paid no principal. That's exactly why the payment jumps: the full amount now amortizes over fewer years.
Why take an interest-only loan?
Lower payments up front — useful for irregular income, or if you expect to sell or refinance before principal kicks in. The risks are the later payment shock and building no equity meanwhile.
How big is the jump?
Often substantial, because principal is squeezed into a shorter term. The "payment increase" figure shows exactly how much.