What interest-only really costs.

Interest-only mortgages pay interest monthly but never reduce the principal. The monthly payment is lower than repayment mortgages, but at the end of the term the full original balance is still owed. This calculator shows the hidden total cost.

A 200,000 loan at 5% over 25 years: interest-only monthly is 833 vs repayment 1,170. Total paid interest-only is 450,000 (250,000 interest + 200,000 balance still owed) vs 351,000 for repayment. The interest-only trap costs nearly 100,000 more over 25 years.

Interest-only makes sense only when you have a credible repayment vehicle (investment portfolio, property sale plan, other assets) or when the property is an investment with expected capital appreciation. For owner-occupied homes, interest-only usually defers the problem rather than solving it.

A worked example

Try the defaults: loan amount of 200,000, interest rate of 5%, term of 25. The tool returns 99,245.98. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Loan Amount, Interest Rate, and Term. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

The formula behind this

Interest-only monthly = loan × monthly rate. Interest-only total = monthly × months + original balance. Repayment monthly uses standard amortisation. Trap cost = interest-only total - repayment total. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

Using this to stay on track

The most common failure mode isn't the plan itself — it's letting the balance creep back up while you're paying it down. Set a rule: no new debt added to the same account until the balance is zero. The calculator is only useful if the number it shows doesn't keep resetting.

What this doesn't capture

Real payoff journeys include missed payments, fee changes, balance transfers, and promotional rates that reset. The calculation assumes a steady plan; reality is rarely that clean. Use the figure as the best-case plan against which actual progress gets measured.