Key Takeaway
Interest-only loans charge zero principal during the initial period (typically 3–10 years), keeping EMIs low. But when amortization begins, EMIs spike significantly , creating 'payment shock' for unprepared borrowers.
Interest-Only Loan Calculator
Estimate initial low interest-only payments and subsequent amortizing EMIs.
Payment Structure
Advertisement
Frequently Asked Questions
What is an interest-only home loan?
In an interest-only loan, your monthly payments cover only the interest charges for a specified initial period (e.g., 3-5 years). After this period, the loan converts to a standard EMI covering both principal and interest.
Who benefits from interest-only loans?
Property flippers or investors who intend to sell the property before the interest-only period ends. It minimizes their monthly cash outflow while they hold the asset.
Is the principal reduced during the interest-only period?
No. After paying EMIs for 3 years on an interest-only schedule, your outstanding principal remains exactly what it was on day one.
Get Smarter With Money Every Week
Join 10,000+ readers. One actionable money tip delivered free every Sunday.
Was this calculator helpful?
Advertisement