Interest Only Period Savings Calculator

Interest-only periods save monthly cash. This calculator sizes the savings vs full amortization.

Loan balance

Interest rate

Amortization years

IO period years

Monthly savings

$12,295

Cumulative IO savings

$442,633

Amortized payment

$99,795

How the math works

IO payment = balance × monthly rate. Amortized calculated at full term. Savings = amort − IO.

Match IO periods to lease-up or business ramp. A 3-year IO on a 5-year bridge loan with 2 years of lease-up allows full cash-flow flexibility during the risk phase and principal pay-down starts when NOI is stabilized.

How to Use

Enter loan balance.
Enter interest rate %.
Enter amortization term years.
Enter IO period years.
Read monthly savings and cumulative savings.

Frequently Asked Questions

When to use IO?

Lease-up periods (value-add, development). Seasonal businesses (ramp to stable cash flow). Bridge loans (short hold, flip). Generally shorter-duration situations where cash flow is ramping. Not ideal for stabilized assets.

Cost?

IO rate typically 10-25 bps higher than amortizing. Lifetime interest paid higher (no principal reduction). Use IO to bridge cash flow, not to lower lifetime cost.

Lender view?

IO weakens lender position (no principal reduction during period). Most lenders limit IO to first 2-5 years of term. Construction loans often full-IO. CMBS often 3-5 year IO then amortization resumes.

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.