How the InterestOnly Mortgage Calculator Works:
The InterestOnly Mortgage Calculator is a tool that allows you to calculate the monthly payments for a mortgage during two distinct phases:
 InterestOnly Phase: Where you only pay interest on the loan.
 Principal + Interest Phase: Where you pay both interest and the loan’s principal.
Input Fields:
 Mortgage Amount ($): This is the total amount you are borrowing for the mortgage.
 Example: $250,000
 Mortgage Term: This is the total length of the mortgage. You can enter this in months or years.
 Example: 240 months (20 years)
 Annual Interest Rate (%): This is the interest rate on the mortgage per year.
 Example: 5.125%
 InterestOnly Term: This is the period in which you will only make interest payments. You can enter this in months or years.
 Example: 5 years
How It Works:

InterestOnly Phase: During the interestonly phase, your payment only covers the interest. The formula to calculate the interestonly payment is:
$\text{InterestOnly Payment} = \text{Mortgage Amount} \times \left( \frac{\text{Annual Interest Rate}}{12 \times 100} \right)$Example: For a mortgage of $250,000 at an annual interest rate of 5.125%, the monthly interestonly payment would be calculated as:
$\text{InterestOnly Payment} = 250,000 \times \left( \frac{5.125}{12 \times 100} \right) = 1,067.71 \text{ USD}$In this phase, you do not pay off any part of the loan principal, so the balance of your loan remains unchanged.

Principal + Interest Phase: After the interestonly term ends, you will begin making payments that include both the principal and interest. The formula to calculate the principal + interest payment is:
$\text{Principal + Interest Payment} = \frac{\text{Mortgage Amount} \times \text{Monthly Interest Rate}}{1 – (1 + \text{Monthly Interest Rate})^{\text{Remaining Term}}}$Where:
 Monthly Interest Rate is the annual interest rate divided by 12.
 Remaining Term is the total mortgage term minus the interestonly term, converted into months.
Example: After a 5year interestonly period (60 months) on a 20year mortgage (240 months), the remaining term would be 180 months. The monthly payment for principal and interest would be calculated as:
$\text{Principal + Interest Payment} = \frac{250,000 \times 0.0042708}{1 – (1 + 0.0042708)^{180}} = 1,993.30 \text{ USD}$
How to Use the Calculator:
 Enter the Mortgage Amount: For example, $250,000.
 Choose the Mortgage Term: For example, 240 months (or 20 years).
 Input the Annual Interest Rate: For example, 5.125%.
 Set the InterestOnly Term: For example, 5 years (or 60 months).
Example Calculation:
Let’s assume the following input:
 Mortgage Amount: $250,000
 Mortgage Term: 240 months (20 years)
 Annual Interest Rate: 5.125%
 InterestOnly Term: 5 years (60 months)
Result:
 InterestOnly Payment: $1,067.71 per month for the first 5 years.
 Principal + Interest Payment: $1,993.30 per month for the remaining 15 years (180 months).
This provides a clear understanding of what you’ll be paying during each phase of the mortgage and helps in financial planning.