Repayment Comparison Calculator
Compare principal & interest versus interest-only repayments side by side over the life of a loan.
Tool only — not financial, tax, or legal advice. Figures are estimates. Consult qualified professionals before making decisions.
Inputs
Comparison
P&I monthly repayment
$2,998
IO monthly repayment
$2,500
- Monthly difference
- $498
- Total interest saved by P&I (over full term)
- $37,261
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How this calculator works
The P&I path uses the standard amortising loan formula across the full term, so each repayment includes both interest and a principal component.
The IO path keeps the principal constant during the IO period; repayments are simply principal × period rate. After the IO period ends the loan reverts to P&I across the remaining term, which is included in the totals shown.
The comparison subtracts the total interest paid under P&I from the total interest paid under IO over the loan’s full life to give the total interest saved figure.
Frequently asked questions
- What is the monthly difference between P&I and IO?
- Interest-only repayments are lower each month because they cover only the interest. P&I repayments include a principal portion as well, so each repayment is higher but the loan balance reduces over time.
- How much total interest can P&I save versus IO?
- Because IO repayments do not reduce the principal during the IO period, more interest accrues on the full balance for longer. The total interest figure shown is the difference between the two paths over the full term.
- What does break-even mean in this context?
- Break-even is the month at which the cumulative cost of P&I overtakes the cumulative cost of IO. Before that month IO has been cheaper to service; after it, P&I is cheaper in total dollars paid.
- When is interest-only commonly used?
- IO is commonly used during construction, when investors want to maximise short-term cash flow, or when a borrower expects to refinance or sell within the IO period. Each lender has its own IO eligibility rules.