How this calculator works
Interest-only payments cover the periodic interest on an unchanged balance. Canadian mode converts the nominal semi-annual rate to the chosen payment period; monthly US compounding is also available. The total covers only the interest-only period. It excludes the principal repayment or higher amortizing payments required afterwards.
Formula
Periodic rate i = (1 + r/c)^(c/f) - 1, where c is compounding periods and f is payments per year. Interest-only payment = principal × i. Total interest = payment × number of periods. Implied nominal rate = c × ((1 + payment/principal)^(f/c) - 1).
Worked example
For a US$300,000 equivalent balance at 6% with monthly compounding, monthly interest-only payments are $1,500. Over 60 payments, total interest is $90,000 and the $300,000 principal remains unpaid.
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Frequently asked questions
Does the loan balance fall?
No. These payments cover interest only. A separate arrangement must repay the principal.
Is daily interest exact for my mortgage?
The daily option assumes 365 equal periods per year. Lender day-count and leap-year conventions can differ.
Can I solve a zero-rate loan balance from its interest payment?
No. At 0%, every balance has zero interest, so a unique balance cannot be recovered from that payment.