1. What is the ANZ Interest Only Calculator?

The ANZ Interest Only Calculator calculates the monthly payment for an interest-only loan from ANZ Bank. This type of loan requires paying only the interest portion for a specified period, without reducing the principal balance.

2. How Does the Calculator Work?

The calculator uses the interest-only formula:

Where:

• \( P \) — Principal amount (currency units)
• \( R \) — Annual interest rate (%)

Explanation: The formula calculates the monthly interest payment by converting the annual rate to a monthly rate and applying it to the principal amount.

3. Importance of Interest-Only Calculation

Details: Understanding interest-only payments helps borrowers plan their finances during the interest-only period and prepare for when principal payments begin. It's commonly used in mortgage and investment loan scenarios.

4. Using the Calculator

Tips: Enter the principal amount in currency units 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 loan?
A: An interest-only loan requires paying only the interest for a set period, after which both principal and interest payments are required.

Q2: How long do interest-only periods typically last?
A: Interest-only periods usually range from 1-10 years, depending on the loan terms and lender policies.

Q3: What happens after the interest-only period ends?
A: After the interest-only period, payments increase significantly as you begin paying both principal and interest over the remaining loan term.

Q4: Are there advantages to interest-only loans?
A: Lower initial payments can improve cash flow, but you won't build equity in the property during the interest-only period.

Q5: Who typically uses interest-only loans?
A: Investors often use interest-only loans for investment properties to maximize tax deductions and improve cash flow.