Interest-only mortgage calculator with balloon payment
Estimate monthly interest-only payments and see how the principal will eventually be repaid. Choose a principal balloon at the end of the interest-only period or a transition to principal-and-interest repayments. The result includes remaining principal, total interest, scenario comparison and a monthly or annual schedule.
An interest-only payment covers the modeled interest rather than reducing principal. The original balance remains outstanding throughout that phase. A low early payment therefore does not mean the debt has been paid down. This tool makes the later repayment obligation visible alongside the initial payment.
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Optional mortgage and personal finance books (paid link) can support learning about interest-only, repayment and balloon structures. You do not need to buy anything to calculate.
How to compare interest-only mortgage payments
- Enter the principal, currency label and annual rate during the interest-only phase.
- Enter the interest-only years and additional months.
- Choose either a final principal balloon or later principal-and-interest repayments.
- For repayment mode, enter the additional repayment term and optionally a different assumed annual rate. Blank later rate means the initial rate is retained.
- Calculate and compare the interest-only plan with level repayments at the initial rate over the same total horizon. Inspect the schedule or download CSV.
The later repayment term is additional to the interest-only period. For a 30-year total model with 5 years interest-only, enter 5 years for the first phase and 25 years for the repayment phase. It is not a 35-year model. The combined term must be no more than 600 months.
Optional document organizers (paid link) can help keep the rate quotation and repayment terms available while checking these inputs.
Interest-only payment, balloon and repayment formulas
Balloon principal = P
Later repayment M = P × r ÷ [1 − (1+r)−n]
P is the unchanged principal during the interest-only phase. For the later repayment formula, r is the later nominal annual rate divided by 100 and by 12, and n is only the later repayment months. At a later rate of 0%, M = P ÷ n.
For example, GBP 200,000 at 6% produces a monthly interest-only payment of GBP 1,000. Over 5 years, interest totals GBP 60,000. In balloon mode, the last payment combines GBP 1,000 interest with GBP 200,000 principal, giving GBP 201,000 due at that point. Total cash paid is GBP 260,000, including the principal once.
If the same principal instead converts after 5 years into 20 years of repayment at 6%, the later monthly P&I payment is about GBP 1,432.86. The schedule shows the principal declining only after the repayment phase starts. Optional financial calculators (paid link) can help check the arithmetic.
Interest-only mortgage calculator: UK and Australia
UK mortgage borrowers may compare an interest-only payment with a capital-repayment mortgage or examine the principal due at maturity. Australian borrowers may compare the initial payment with the higher repayment after an interest-only period expires. These are planning uses, not statements of local eligibility or lending policy.
This interest-only mortgage calculator uses the nominal annual rate divided by 12 for equal monthly periods. UK and Australian lenders may accrue interest daily and use different payment dates or conventions. Selecting GBP or AUD changes the money label, not the formula. Taxes, insurance, fees, offsets and local rules are excluded. The result is an educational estimate rather than a bank quote.
Optional budget planners (paid link) can help record whether a later repayment fits your budget. Use the linked MoneyHelper and ASIC Moneysmart explanations below to understand the structure; use your lender’s actual terms for a lending decision.
Comparison assumptions and calculator limits
The comparison scenario amortizes the full principal from month 1 over the same total number of months, with the initial entered rate held fixed throughout. In repayment mode, changing the later rate affects the interest-only plan but not this comparison. The displayed interest difference therefore includes the effect of both the payment structure and your changed-rate assumption; it is not a forecast or a guaranteed saving.
The principal must be greater than zero and no more than 1 billion currency units. Rates range from 0% to 50%, with up to eight decimal places. Money accepts up to two decimals. Interest-only and later repayment periods use whole years plus 0–11 additional months; the combined horizon is 1–600 months. A zero rate is supported and still leaves the principal payable. Principal prepayments, variable-rate paths, fees, taxes, insurance and escrow are outside this model.
The schedule retains precision and rounds for display. Balloon principal is included in the final scheduled payment, not added as a second principal charge. For fixed-principal interest over a single term, use the Simple Interest Calculator. For standard ownership-cost planning, use the Mortgage Calculator. For a lump-sum payment that lowers required repayments without replacing the loan, use the Mortgage Recast Calculator.
Interest-Only Mortgage Calculator FAQs
Sources and methodology
Independent educational monthly-payment model, reviewed October 21, 2026. These sources explain the product structures. The site is not affiliated with the lenders, agencies or publishers. Assumptions and exclusions are stated above.