Interest-Only Loan worksheet

1. Interest-only payment: $2,187.50

1. Find the monthly rate: divide the yearly rate by 12, because interest is charged every month

   $\frac{7.5}{\mathrm{1,200}}$$=0.00625$

2. Interest-only payment for the first 144 months: one month's interest on the full loan, so the balance stays the same

   $\mathrm{\$350,000.00}\times 0.00625$$=\mathrm{\$2,187.50}$

3. Payment once you start paying down the loan: a standard formula finds the one monthly amount that pays it off in the remaining 96 months

   $\frac{\mathrm{\$350,000.00}\times 0.00625}{1-{\left(1+0.00625\right)}^{\mathrm{-96}}}$$=\mathrm{\$4,859.35}$

4. Add up all the interest: the interest-only payments plus the interest paid in the repayment years

   $\mathrm{\$2,187.50}\times 144+\mathrm{\$116,498.05}$$=\mathrm{\$431,498.05}$

5. Subtract the interest on a regular loan that pays down the principal from the start over 240 months. The gap is the extra cost

   $\mathrm{\$431,498.05}-\mathrm{\$326,698.28}$$=\mathrm{\$104,799.77}$

2. Interest-only payment: $1,500.00

1. Find the monthly rate: divide the yearly rate by 12, because interest is charged every month

   $\frac{6}{\mathrm{1,200}}$$=0.005$

2. Interest-only payment for the first 84 months: one month's interest on the full loan, so the balance stays the same

   $\mathrm{\$300,000.00}\times 0.005$$=\mathrm{\$1,500.00}$

3. Payment once you start paying down the loan: a standard formula finds the one monthly amount that pays it off in the remaining 276 months

   $\frac{\mathrm{\$300,000.00}\times 0.005}{1-{\left(1+0.005\right)}^{\mathrm{-276}}}$$=\mathrm{\$2,006.54}$

4. Add up all the interest: the interest-only payments plus the interest paid in the repayment years

   $\mathrm{\$1,500.00}\times 84+\mathrm{\$253,805.48}$$=\mathrm{\$379,805.48}$

5. Subtract the interest on a regular loan that pays down the principal from the start over 360 months. The gap is the extra cost

   $\mathrm{\$379,805.48}-\mathrm{\$347,514.57}$$=\mathrm{\$32,290.92}$

3. Interest-only payment: $2,100.00

1. Find the monthly rate: divide the yearly rate by 12, because interest is charged every month

   $\frac{7}{\mathrm{1,200}}$$=0.00583333$

2. Interest-only payment for the first 144 months: one month's interest on the full loan, so the balance stays the same

   $\mathrm{\$360,000.00}\times 0.00583333$$=\mathrm{\$2,100.00}$

3. Payment once you start paying down the loan: a standard formula finds the one monthly amount that pays it off in the remaining 96 months

   $\frac{\mathrm{\$360,000.00}\times 0.00583333}{1-{\left(1+0.00583333\right)}^{\mathrm{-96}}}$$=\mathrm{\$4,908.14}$

4. Add up all the interest: the interest-only payments plus the interest paid in the repayment years

   $\mathrm{\$2,100.00}\times 144+\mathrm{\$111,181.26}$$=\mathrm{\$413,581.26}$

5. Subtract the interest on a regular loan that pays down the principal from the start over 240 months. The gap is the extra cost

   $\mathrm{\$413,581.26}-\mathrm{\$309,858.28}$$=\mathrm{\$103,722.98}$

4. Interest-only payment: $1,760.00

1. Find the monthly rate: divide the yearly rate by 12, because interest is charged every month

   $\frac{6.4}{\mathrm{1,200}}$$=0.00533333$

2. Interest-only payment for the first 120 months: one month's interest on the full loan, so the balance stays the same

   $\mathrm{\$330,000.00}\times 0.00533333$$=\mathrm{\$1,760.00}$

3. Payment once you start paying down the loan: a standard formula finds the one monthly amount that pays it off in the remaining 240 months

   $\frac{\mathrm{\$330,000.00}\times 0.00533333}{1-{\left(1+0.00533333\right)}^{\mathrm{-240}}}$$=\mathrm{\$2,441.00}$

4. Add up all the interest: the interest-only payments plus the interest paid in the repayment years

   $\mathrm{\$1,760.00}\times 120+\mathrm{\$255,840.46}$$=\mathrm{\$467,040.46}$

5. Subtract the interest on a regular loan that pays down the principal from the start over 360 months. The gap is the extra cost

   $\mathrm{\$467,040.46}-\mathrm{\$413,101.02}$$=\mathrm{\$53,939.44}$

5. Interest-only payment: $3,000.00

1. Find the monthly rate: divide the yearly rate by 12, because interest is charged every month

   $\frac{9}{\mathrm{1,200}}$$=0.0075$

2. Interest-only payment for the first 144 months: one month's interest on the full loan, so the balance stays the same

   $\mathrm{\$400,000.00}\times 0.0075$$=\mathrm{\$3,000.00}$

3. Payment once you start paying down the loan: a standard formula finds the one monthly amount that pays it off in the remaining 216 months

   $\frac{\mathrm{\$400,000.00}\times 0.0075}{1-{\left(1+0.0075\right)}^{\mathrm{-216}}}$$=\mathrm{\$3,745.78}$

4. Add up all the interest: the interest-only payments plus the interest paid in the repayment years

   $\mathrm{\$3,000.00}\times 144+\mathrm{\$409,088.34}$$=\mathrm{\$841,088.34}$

5. Subtract the interest on a regular loan that pays down the principal from the start over 360 months. The gap is the extra cost

   $\mathrm{\$841,088.34}-\mathrm{\$758,656.57}$$=\mathrm{\$82,431.77}$

6. Interest-only payment: $2,437.50

1. Find the monthly rate: divide the yearly rate by 12, because interest is charged every month

   $\frac{6.5}{\mathrm{1,200}}$$=0.00541667$

2. Interest-only payment for the first 108 months: one month's interest on the full loan, so the balance stays the same

   $\mathrm{\$450,000.00}\times 0.00541667$$=\mathrm{\$2,437.50}$

3. Payment once you start paying down the loan: a standard formula finds the one monthly amount that pays it off in the remaining 132 months

   $\frac{\mathrm{\$450,000.00}\times 0.00541667}{1-{\left(1+0.00541667\right)}^{\mathrm{-132}}}$$=\mathrm{\$4,780.70}$

4. Add up all the interest: the interest-only payments plus the interest paid in the repayment years

   $\mathrm{\$2,437.50}\times 108+\mathrm{\$181,051.77}$$=\mathrm{\$444,301.77}$

5. Subtract the interest on a regular loan that pays down the principal from the start over 240 months. The gap is the extra cost

   $\mathrm{\$444,301.77}-\mathrm{\$355,218.99}$$=\mathrm{\$89,082.78}$

7. Interest-only payment: $2,058.33

1. Find the monthly rate: divide the yearly rate by 12, because interest is charged every month

   $\frac{6.5}{\mathrm{1,200}}$$=0.00541667$

2. Interest-only payment for the first 84 months: one month's interest on the full loan, so the balance stays the same

   $\mathrm{\$380,000.00}\times 0.00541667$$=\mathrm{\$2,058.33}$

3. Payment once you start paying down the loan: a standard formula finds the one monthly amount that pays it off in the remaining 156 months

   $\frac{\mathrm{\$380,000.00}\times 0.00541667}{1-{\left(1+0.00541667\right)}^{\mathrm{-156}}}$$=\mathrm{\$3,614.52}$

4. Add up all the interest: the interest-only payments plus the interest paid in the repayment years

   $\mathrm{\$2,058.33}\times 84+\mathrm{\$183,865.54}$$=\mathrm{\$356,765.54}$

5. Subtract the interest on a regular loan that pays down the principal from the start over 240 months. The gap is the extra cost

   $\mathrm{\$356,765.54}-\mathrm{\$299,962.70}$$=\mathrm{\$56,802.84}$

8. Interest-only payment: $1,266.67

1. Find the monthly rate: divide the yearly rate by 12, because interest is charged every month

   $\frac{4}{\mathrm{1,200}}$$=0.00333333$

2. Interest-only payment for the first 120 months: one month's interest on the full loan, so the balance stays the same

   $\mathrm{\$380,000.00}\times 0.00333333$$=\mathrm{\$1,266.67}$

3. Payment once you start paying down the loan: a standard formula finds the one monthly amount that pays it off in the remaining 180 months

   $\frac{\mathrm{\$380,000.00}\times 0.00333333}{1-{\left(1+0.00333333\right)}^{\mathrm{-180}}}$$=\mathrm{\$2,810.81}$

4. Add up all the interest: the interest-only payments plus the interest paid in the repayment years

   $\mathrm{\$1,266.67}\times 120+\mathrm{\$125,946.54}$$=\mathrm{\$277,946.54}$

5. Subtract the interest on a regular loan that pays down the principal from the start over 300 months. The gap is the extra cost

   $\mathrm{\$277,946.54}-\mathrm{\$221,734.00}$$=\mathrm{\$56,212.54}$

9. Interest-only payment: $2,312.50

1. Find the monthly rate: divide the yearly rate by 12, because interest is charged every month

   $\frac{7.4}{\mathrm{1,200}}$$=0.00616667$

2. Interest-only payment for the first 108 months: one month's interest on the full loan, so the balance stays the same

   $\mathrm{\$375,000.00}\times 0.00616667$$=\mathrm{\$2,312.50}$

3. Payment once you start paying down the loan: a standard formula finds the one monthly amount that pays it off in the remaining 252 months

   $\frac{\mathrm{\$375,000.00}\times 0.00616667}{1-{\left(1+0.00616667\right)}^{\mathrm{-252}}}$$=\mathrm{\$2,936.18}$

4. Add up all the interest: the interest-only payments plus the interest paid in the repayment years

   $\mathrm{\$2,312.50}\times 108+\mathrm{\$364,917.19}$$=\mathrm{\$614,667.19}$

5. Subtract the interest on a regular loan that pays down the principal from the start over 360 months. The gap is the extra cost

   $\mathrm{\$614,667.19}-\mathrm{\$559,712.73}$$=\mathrm{\$54,954.46}$

10. Interest-only payment: $1,633.33

1. Find the monthly rate: divide the yearly rate by 12, because interest is charged every month

   $\frac{5.6}{\mathrm{1,200}}$$=0.00466667$

2. Interest-only payment for the first 108 months: one month's interest on the full loan, so the balance stays the same

   $\mathrm{\$350,000.00}\times 0.00466667$$=\mathrm{\$1,633.33}$

3. Payment once you start paying down the loan: a standard formula finds the one monthly amount that pays it off in the remaining 132 months

   $\frac{\mathrm{\$350,000.00}\times 0.00466667}{1-{\left(1+0.00466667\right)}^{\mathrm{-132}}}$$=\mathrm{\$3,557.49}$

4. Add up all the interest: the interest-only payments plus the interest paid in the repayment years

   $\mathrm{\$1,633.33}\times 108+\mathrm{\$119,588.87}$$=\mathrm{\$295,988.87}$

5. Subtract the interest on a regular loan that pays down the principal from the start over 240 months. The gap is the extra cost

   $\mathrm{\$295,988.87}-\mathrm{\$232,579.91}$$=\mathrm{\$63,408.96}$