Interest-only mortgages
With an interest-only mortgage, monthly payments cover only the interest on the loan.
The loan balance remains unchanged until the end of the mortgage term, at which point the full balance must be repaid.
Lower monthly payments often result in higher short-term cash flow.
Repayment mortgages
With a repayment mortgage, monthly payments include both interest and capital repayment.
Over time, the loan balance reduces, which can lower interest costs but increases monthly payments compared to interest-only options.
Cash flow considerations
Interest-only mortgages typically produce higher monthly profit because payments are lower.
Repayment mortgages reduce long-term debt but may reduce monthly surplus.
Long-term cost considerations
Repayment mortgages reduce the loan balance over time, which can reduce total interest paid.
Interest-only mortgages may result in higher total interest costs over the life of the loan.
Using the calculator
The calculator allows switching between mortgage types to compare how monthly payments, profit, and ROI change under each option.