How does an amortization table for interest only loan work?

An amortization table for interest only loan splits the loan into two phases: during the initial interest-only period (e.g., 5 to 10 years), your monthly payment covers only accrued interest, leaving the principal balance unchanged. Once the interest-only period ends, payments increase significantly to amortize both remaining principal and interest over the loan duration.

What is the amortisation schedule formula and amortization payment formula?

The standard amortization payment formula and installment loan formula is: M = P * [r(1+r)^n] / [(1+r)^n - 1], where M is monthly payment, P is principal balance, r is monthly interest rate, and n is total payment months. In the interest-only phase, the formula is simply: M = P * (Annual Rate / 12).

How to calculate annual interest on loan and deferred payment loans?

To calculate annual interest on loan, multiply your principal loan balance by the annual percentage rate (APR): Annual Interest = Principal * (Rate / 100). On a deferred payment loan calculator, accrued interest during payment deferral may capitalize into the principal balance depending on contract terms.

Mortgage & Loan Financial Engine

Interest-Only Loan Amortization Calculator

Generate a dynamic amortization table for interest only loan, calculate payments with our deferred payment loan calculator, or export a loan payment sheet.

Loan Amount ($)

Annual Interest Rate (%)

Total Loan Term (Years)

Interest-Only Period (Years)

Phase 1: Monthly Payment

$1,625.00

Interest-Only (Months 1–60)

Phase 2: Monthly Payment

$2,025.62

Principal + Interest (Years 6–30)

Total Interest Paid

$405,186

Over full loan life

Total Loan Cost

$705,186

Principal + Total Interest

Annual Amortization Schedule

Year	Phase Type	Annual Payment	Principal Paid	Interest Paid	Ending Balance

Amortisation Schedule Formula & Mathematical Equations

Whether you are evaluating a mortgage, setting up an amortization sheet for personal loan, or modeling a deferred payment loan calculator, understanding the amortisation schedule formula is vital.

Installment Loan Formula

The standard installment loan formula and amortization payment formula for fully amortizing repayment:

M = P × [ r(1+r)ⁿ ] / [ (1+r)ⁿ - 1 ]

Where M = monthly payment, P = principal, r = monthly interest rate, n = total months.

Calculate Annual Interest on Loan

How to calculate annual interest on loan during the interest-only phase:

Monthly IO = Principal × (Annual Rate / 12)

During this phase, zero principal is paid down, so monthly interest remains fixed.