Interest Only vs Repayment Calculator
Compare monthly cost and total cost of interest-only against a repayment mortgage, including the capital still owed at the end of the term.
💼 Are you a real estate agent or broker? Send this calculator to your buyers on your own branded listing page — every enquiry comes straight to your WhatsApp. Create free agent page →Interest-only lowers the monthly payment substantially because none of it reduces the debt. The balance at the end of the term is exactly what you borrowed, and it has to be repaid from somewhere — a sale, an investment, or a refinance that will be assessed at whatever age and income you have then.
The comparison that matters is not the monthly figure but the total: interest paid across the term plus the capital still outstanding.
The comparison
Interest-only payment = balance × monthly rate, and the balance never falls. Total cost is that payment across the term plus the original capital, which is still owed. Repayment total is simply the payment across the term, at the end of which nothing is owed.
Worked example
On 250,000 at 6.5% over 25 years, interest-only costs 1,354 a month against 1,688 on repayment — 334 less. But interest-only pays 406,250 of interest and still owes 250,000, a total of 656,250, while repayment costs 506,400 and clears the debt. Interest-only costs about 150,000 more.
The repayment plan is the whole question
Interest-only is defensible where there is a genuine, evidenced plan to repay the capital — a property being sold, an investment maturing, or a business exit. Where the plan is that something will turn up, the term ends with a demand for the full balance and few options.
Turn a calculation into an enquiry
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Create your free property pageFrequently asked questions
Why would anyone choose interest-only?
For rental property, where interest may be treated differently for tax and the capital is repaid by selling; for genuinely short-term borrowing; or where income is lumpy and capital will be repaid in irregular lump sums.
Can I switch from interest-only to repayment later?
Usually, subject to affordability at that point. Switching later means repaying the same capital over fewer years, so the payment jump can be severe — the earlier the switch, the smaller the shock.
What happens if I cannot repay at the end?
The lender expects the full balance. Options are selling, refinancing if you still qualify at that age and income, or a term extension at the lender discretion. None are guaranteed, which is why the repayment plan matters from day one.