interest only calculator
An interest-only calculator is a financial tool that helps borrowers calculate the monthly payments on an interest-only loan. Unlike traditional loans where borrowers pay both the principal (the amount borrowed) and the interest (the cost of borrowing), with an interest-only loan, borrowers only pay the interest for a specified period, typically for a few years at the beginning of the loan term. After this initial period, the loan typically converts to a traditional amortizing loan where both principal and interest are paid.
The interest-only calculator requires inputs such as the loan amount, interest rate, and the interest-only period. It then calculates the monthly payment based solely on the interest portion of the loan, excluding any repayment of the principal. This type of loan structure can result in lower initial monthly payments compared to traditional loans, but borrowers should be aware that they'll need to make higher payments once the interest-only period ends.