1. What is Interest Only Loan Calculator CBA?

The Interest Only Loan Calculator CBA calculates monthly interest-only payments for Commonwealth Bank of Australia loans. It uses the simple formula EMI = P × R, where P is the principal amount and R is the monthly interest rate.

2. How Does the Calculator Work?

The calculator uses the interest only loan formula:

Where:

• \( P \) — Principal loan amount (AUD)
• \( R \) — Monthly interest rate (decimal)
• \( EMI \) — Monthly interest-only payment (AUD)

Explanation: This formula calculates the monthly interest payment only, without reducing the principal balance.

3. Importance of Interest Only Payment Calculation

Details: Accurate interest-only payment calculation is crucial for budgeting and financial planning, especially for investment properties or short-term financing arrangements.

4. Using the Calculator

Tips: Enter the principal amount in AUD and the monthly interest rate as a decimal (e.g., 0.005 for 0.5%). All values must be valid (principal > 0, rate ≥ 0).

5. Frequently Asked Questions (FAQ)

Q1: What is an interest-only loan?
A: An interest-only loan requires the borrower to pay only the interest portion of the loan for a specified period, without reducing the principal balance.

Q2: How do I convert annual interest rate to monthly?
A: Divide the annual interest rate by 12. For example, 6% annual rate = 0.06/12 = 0.005 monthly rate.

Q3: What are typical interest-only periods for CBA loans?
A: CBA typically offers interest-only periods of 1-5 years for investment loans and some owner-occupied loans.

Q4: Are there additional fees with interest-only loans?
A: Interest-only loans may have slightly higher interest rates and may require LMI if the LVR is above 80%.

Q5: What happens after the interest-only period ends?
A: After the interest-only period, the loan reverts to principal and interest payments, which will be higher as you start paying down the principal.