Interest Only vs P&I

What does interest only really cost?

Loan amount $600,000

Interest rate 6.20%

Interest-only years 5 yrs

Extra interest the IO period costs

Move a slider to see the difference.

Extra, because of the IO period $0

Interest you’d have paid anyway $0

Repayment during the IO period –

Repayment once it ends –

P&I from day one, for comparison –

30-year total term, monthly repayments, one fixed rate for the life of the loan, no offset account and no fees. The same rate is used during and after the interest-only period — in practice lenders usually charge a margin more for interest-only, so the real cost of deferring principal is higher than shown here. After the IO period the whole balance is amortised over the remaining term. Doesn’t include fees, stamp duty or LMI. Indicative only. Not financial advice.