Home
Back
Interest Only Mortgage Formula:
| From: | To: |
The Interest Only Mortgage Calculator ANZ calculates the monthly interest-only payment for an ANZ mortgage. This type of mortgage payment covers only the interest portion of the loan, with the principal amount remaining unchanged during the interest-only period.
The calculator uses the interest-only mortgage formula:
Where:
Explanation: The formula calculates the monthly interest payment by converting the annual interest rate to a monthly rate and multiplying it by the principal amount.
Details: Calculating interest-only payments helps borrowers understand their monthly financial obligations during the interest-only period of their mortgage, allowing for better budgeting and financial planning.
Tips: Enter the principal loan amount in AUD and the annual interest rate as a percentage. All values must be valid (principal > 0, rate > 0).
Q1: What is an interest-only mortgage?
A: An interest-only mortgage is a loan where the borrower pays only the interest for a set period, after which they must start paying both principal and interest.
Q2: How long is the interest-only period typically?
A: Interest-only periods typically range from 1-10 years, depending on the lender and loan terms.
Q3: What happens after the interest-only period ends?
A: After the interest-only period, the loan converts to a principal and interest loan, which will have higher monthly payments.
Q4: Are interest-only mortgages suitable for everyone?
A: Interest-only mortgages are typically suitable for investors or those with irregular income who expect to sell the property or refinance before the interest-only period ends.
Q5: What are the risks of interest-only mortgages?
A: The main risk is that property values may not increase as expected, making it difficult to refinance or sell the property when the interest-only period ends.