Interest-only vs principal and interest calculator
Compare an interest-only loan with principal and interest: monthly repayments, total interest paid, the repayment shock when the IO period ends, and the year P&I becomes the cheaper option.
Rates, insurance and property management, not including your loan repayments.
1–30
P&I monthly
$2,494
IO monthly
$2,080
Monthly repayment after IO ends
$2,680
P&I cheaper from
Yr 17
P&I total interest
$481,887
IO total interest
$512,888
Annual saving during IO
$4,970
Only while the loan stays interest-only. Repayments rise once the IO period ends.
| Year | P&I repayment | IO repayment | P&I balance | IO balance | P&I cashflow | IO cashflow |
|---|---|---|---|---|---|---|
| 1 | $29,930 | $24,960 | $410,891 | $416,000 | -$7,250 | -$2,280 |
| 2 | $29,930 | $24,960 | $405,468 | $416,000 | -$7,250 | -$2,280 |
| 3 | $29,930 | $24,960 | $399,710 | $416,000 | -$7,250 | -$2,280 |
| 4 | $29,930 | $24,960 | $393,596 | $416,000 | -$7,250 | -$2,280 |
| 5 | $29,930 | $24,960 | $387,106 | $416,000 | -$7,250 | -$2,280 |
| 6 | $29,930 | $32,164 | $380,215 | $408,595 | -$7,250 | -$9,484 |
| 7 | $29,930 | $32,164 | $372,900 | $400,733 | -$7,250 | -$9,484 |
| 8 | $29,930 | $32,164 | $365,133 | $392,387 | -$7,250 | -$9,484 |
| 9 | $29,930 | $32,164 | $356,887 | $383,525 | -$7,250 | -$9,484 |
| 10 | $29,930 | $32,164 | $348,133 | $374,117 | -$7,250 | -$9,484 |
| 11 | $29,930 | $32,164 | $338,838 | $364,129 | -$7,250 | -$9,484 |
| 12 | $29,930 | $32,164 | $328,970 | $353,525 | -$7,250 | -$9,484 |
| 13 | $29,930 | $32,164 | $318,494 | $342,267 | -$7,250 | -$9,484 |
| 14 | $29,930 | $32,164 | $307,372 | $330,314 | -$7,250 | -$9,484 |
| 15 | $29,930 | $32,164 | $295,563 | $317,624 | -$7,250 | -$9,484 |
| 16 | $29,930 | $32,164 | $283,026 | $304,152 | -$7,250 | -$9,484 |
| 17 | $29,930 | $32,164 | $269,716 | $289,848 | -$7,250 | -$9,484 |
| 18 | $29,930 | $32,164 | $255,585 | $274,662 | -$7,250 | -$9,484 |
| 19 | $29,930 | $32,164 | $240,583 | $258,540 | -$7,250 | -$9,484 |
| 20 | $29,930 | $32,164 | $224,655 | $241,423 | -$7,250 | -$9,484 |
| 21 | $29,930 | $32,164 | $207,745 | $223,251 | -$7,250 | -$9,484 |
| 22 | $29,930 | $32,164 | $189,791 | $203,958 | -$7,250 | -$9,484 |
| 23 | $29,930 | $32,164 | $170,731 | $183,474 | -$7,250 | -$9,484 |
| 24 | $29,930 | $32,164 | $150,495 | $161,728 | -$7,250 | -$9,484 |
| 25 | $29,930 | $32,164 | $129,010 | $138,640 | -$7,250 | -$9,484 |
| 26 | $29,930 | $32,164 | $106,201 | $114,128 | -$7,250 | -$9,484 |
| 27 | $29,930 | $32,164 | $81,985 | $88,104 | -$7,250 | -$9,484 |
| 28 | $29,930 | $32,164 | $56,275 | $60,475 | -$7,250 | -$9,484 |
| 29 | $29,930 | $32,164 | $28,979 | $31,142 | -$7,250 | -$9,484 |
| 30 | $29,930 | $32,164 | $0 | $0 | -$7,250 | -$9,484 |
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How interest-only and P&I loans differ
On a principal and interest loan every repayment chips away at the balance, so you steadily build equity and the interest charged falls over time. On an interest-only loan you pay only the interest for a set period, commonly up to five years, which keeps repayments low but leaves the balance untouched. When the IO period ends the loan reverts to P&I over the shorter remaining term, and repayments jump.
That trade-off is the whole decision: lower repayments now against a higher total interest bill and a repayment shock later. Investors often accept it to protect short-term cash flow and keep the deductible balance high; owner-occupiers rarely benefit. Enter your own figures above to see the gap for your loan.
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