Investing
Interest only vs P&I calculator.
Interest-only improves cashflow today and costs more over the life of the loan. Both are true.
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Monthly cashflow difference
$651
Interest-only frees up $651 a month now, but repayments rise to $4,661 once the interest-only period ends.
- Interest-only repayment
- $3,704
- Principal & interest repayment
- $4,356
- Repayment after the 5-year IO period
- $4,661
- Additional interest over the loan life
- $52,531
What could change this figure
- The repayment shock when the interest-only period ends
- Whether the lender will extend interest-only later, as they may not
- Tax treatment for investment lending, which is your accountant's area
- Lender pricing: interest-only rates are usually higher than P&I
This is an estimate only, based on the figures you have entered and simplified assumptions. It is not credit advice, an offer of credit, or an indication that any lender will approve a loan. Interest-only lending does not reduce the loan balance. Tax outcomes depend on your circumstances. Confirm with your accountant.
How this is calculated
- Principal and interest is compressed into the remaining term after the interest-only period ends.
- Interest-only rates are usually higher than P&I. The same rate is used here for comparison.
- Tax treatment depends on your circumstances and is a question for your accountant.
Free guide
The Investor's Loan Structure Guide
Equity, structure and borrowing capacity
- How to work out your usable equity
- Cross collateralisation explained, and why it limits your options
- Structuring loans so your borrowing capacity survives the next purchase, and what the 2027 tax changes mean
- The investment loan features that actually matter
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