§ Calculator · Housing

Interest-only mortgage

What this is

Pay only interest on the loan, principal stays untouched.

HELOCs and some private loans let you pay only the monthly interest. Lower monthly cost, but you build zero equity. After the interest-only period ends, you either refinance, sell, or convert to a fully-amortizing loan with much higher payments.

·Used for: bridge financing, rental property cash flow, short-term holds, HELOCs.
·Trap: the loan never shrinks. If property values fall, you can end up underwater.

Principal (CAD)Rate (%)Interest-only yearsIf converting: total amortization (yrs)

Monthly (interest only)

$2,163

Monthly (fully amortized)

$2,698

Diff per month

$535

Total IO cost

$129,800

Principal after IO period

$400,000

Interest-only is a cash-flow tool, not an equity-build tool. After the IO period the full balance becomes due (balloon) or amortizes over the remaining term — payment jumps sharply.

Disclaimer

Educational, not financial advice. Output is generated by an AI assistant using simplified assumptions. Tax rates, contribution limits, and benefit amounts change annually; confirm with a CFP, CPA, or the relevant Canadian regulator (CRA, FSRA, OSC, IIROC) before acting.