Interest-Only Mortgage Trap Calculator
Enter the loan, rate and both periods to see the payment shock.
Interest-only payment
β
Enter values above
Payment after the IO period
β
Payment shock
β
Extra interest from the IO period
β
Total paid with IO
β
Capital still owed after IO
β
Worked example
With the default inputs shown below, this calculator returns the following results:
| Input | Value |
|---|---|
| Loan amount ($) | 300000 |
| Interest rate (%) | 6 |
| Interest-only period (years) | 5 |
| Total term (years) | 30 |
| Result | Value |
|---|---|
| Interest-only payment | $1,500.00 |
| Payment after the IO period | $1,932.90 |
| Payment shock | $432.90 |
| Extra interest from the IO period | $22,356.69 |
| Total paid with IO | $669,871 |
| Capital still owed after IO | $300,000 |
Values shown are produced by this page in your browser; change any input to update them.
How to use the Interest-Only Mortgage Trap Calculator
- Loan amount ($) β default 300000
- Interest rate (%) β default 6
- Interest-only period (years) β default 5
- Total term (years) β default 30
- Press Calculate to update the results instantly.
Frequently asked questions
Because after the interest-only period the same capital has to be repaid over a much shorter term. Five years of IO on a 30-year mortgage turns the remaining repayment into a 25-year loan, so the payment jumps by 30β50%.
For short periods with a clear repayment plan β a bridging situation, or while waiting for a bonus or sale. It is dangerous when used simply to afford a larger loan.
That is the trap. Lenders should stress-test the reversion payment, but borrowers often focus on the initial figure. Check the post-IO payment before you sign.