1. What is Interest-Only Mortgage Payment?

Interest-only mortgage payments allow borrowers to pay only the interest portion of their loan for a specified period, without reducing the principal balance. This results in lower monthly payments during the interest-only period.

2. How Does the Calculator Work?

The calculator uses the interest-only payment formula:

Where:

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

Explanation: The monthly interest rate is calculated by dividing the annual interest rate by 12 and converting from percentage to decimal form.

3. Importance of Interest-Only Calculation

Details: Understanding interest-only payments helps borrowers plan their finances during the interest-only period and prepare for higher payments when principal repayment begins.

4. Using the Calculator

Tips: Enter the principal amount in NZD and the annual interest rate as a percentage. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is an interest-only mortgage period?
A: A specified time period during which the borrower only pays interest on the loan, typically 1-10 years for ANZ NZ mortgages.

Q2: What happens after the interest-only period ends?
A: The loan converts to principal and interest payments, which will be higher as you start paying down the principal balance.

Q3: Are there any restrictions on interest-only mortgages?
A: Yes, ANZ NZ typically requires a minimum deposit and may have specific eligibility criteria for interest-only loans.

Q4: Can I make principal payments during interest-only period?
A: Yes, most ANZ NZ mortgages allow additional principal payments during the interest-only period, though fees may apply.

Q5: Is interest-only suitable for investment properties?
A: Interest-only mortgages are commonly used for investment properties as they can improve cash flow and provide tax benefits.