Interest-only mortgage calculator
What interest only costs: the repayment now, the jump when principal and interest starts, and the extra interest, compared with a table loan and a reducing loan.
The short answer
Interest only on $600,000 at 5.06% costs $2,530.00 a month. After 5 years, principal and interest over the remaining 25 years is $3,528.55 a month, and the loan costs $42,896 more in interest than a table loan from the start.
| Interest only, monthly, for 5 years | $2,530.00 |
| With actual days (BNZ) | $2,578.53 in a 31-day month, $2,495.35 in a 30-day month, $2,328.99 in a 28-day month |
| Then principal and interest for 25 years | $3,528.55 |
| Total interest | $610,363 |
| Interest on a table loan from the start | $567,467 |
| Extra interest from going interest only | $42,896 |
Three ways to repay the same loan
| Table loan | Interest only for 5 years, then table | Reducing loan | |
|---|---|---|---|
| First repayment | $3,242.97 | $2,530.00 | $4,196.67 |
| Last repayment | $3,242.97 | $3,528.55 | $1,673.70 |
| Total interest | $567,467 | $610,363 | $456,665 |
Balance owing over time
- Table loan
- Interest only for 5 years, then table
- Reducing loan
Interest-only repayments cover the interest and nothing else, so the balance stays where it is. Sorted’s calculator allows up to 5 years of interest only. A reducing loan repays the same principal every time, so repayments start high and fall; ASB lists its reducing loan as closed to new applications.
Interest only, table and reducing loans
Interest-only repayments cover only the interest on what you owe, so the balance does not fall. Banks offer them only to borrowers who meet their criteria. When the interest-only period ends, the whole loan has to be repaid over fewer years, so repayments jump.
BNZ has worked out interest on actual days since 5 May 2024, so an interest-only repayment on a monthly loan is higher in a 31-day month than a 30-day month. A reducing loan repays the same principal every time, so it starts with the highest repayments and costs the least interest.
ASB, Shaping your loan payments · BNZ public notice · Sorted
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