Interest Only Extension Cost Calculator

IO extensions preserve cash flow.

Loan balance

Current rate %

Extension premium bps

Extension years

Extension cost

$270,000

Extended rate %

0.08%

Additional annual interest

$135,000

How the math works

Extended rate = current + premium. Additional interest = balance × premium. Cost = additional × years.

$18M × 75 bps = $135k/yr premium. × 2 yr = $270k total extension cost.

How to Use

Enter loan balance.
Enter current rate %.
Enter extension rate premium bps.
Enter extension years.
Read extension cost.

Frequently Asked Questions

Why extend IO?

Preserves cash flow during slow stabilization or value-add. Principal paydown deferred. Coverage ratio preserved. Common during lease-up or after major capex. Lenders charge premium for extension.

Typical premium?

25-100 bps over initial rate during extended IO. Construction extensions: 50-200 bps. Mezz extensions: 100-300 bps. Agency IO extensions: 25-75 bps. Varies by market conditions and sponsor quality.

Economics?

Extension rate premium × balance × extension years. Compared to: distress cost of forced amortization, equity call, or refi. Usually much cheaper than alternatives when near stabilization.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.