Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.

Skip to content
Home » How do you calculate interest only repayments?

How do you calculate interest only repayments?

When it comes to calculating interest-only loan repayments, the process involves a straightforward formula. To begin, take the principal amount of the loan and multiply it by the interest rate. Next, divide this figure by the repayment frequency. This simple equation provides a clear picture of what your monthly repayments will look like during the interest-only period.

For instance, consider a $500,000 home loan with an interest rate of 3%. Applying the formula, you would multiply $500,000 by 3% to get $15,000. Then, if the repayment frequency is monthly, you divide $15,000 by 12 (for the twelve months in a year). This calculation results in a monthly repayment of $1250 during the interest-only period.

Understanding how to calculate interest-only repayments is crucial for borrowers who have opted for this type of loan. By using this formula, you can gain a clear idea of the financial commitment during the interest-only phase of your loan. It allows you to plan your budget accordingly and prepare for the change in repayment structure once the interest-only period ends.

(Response: To calculate interest-only loan repayments, multiply the principal amount by the loan’s interest rate, and divide by the repayment frequency. For example, for a $500,000 home loan with a 3% interest rate, monthly repayments during the interest-only period would be $1250.)