Interest-only mortgage calculator

How does an interest-only (in fine) loan work?

With an interest-only (in fine) loan, the borrower does not repay the capital over time. Each month they pay only the interest and, where applicable, the borrower's insurance: the payment therefore stays constant and the amount borrowed is repaid in a single lump sum, at maturity.

This arrangement mainly suits investors. It is often backed by an investment (life insurance, capitalisation contract, etc.) funded in parallel, whose value at maturity is intended to repay the capital. Because interest is charged on the full capital for the whole term, the total cost of credit is higher than for an amortising loan; in return, the interest may be deductible from property income.

Formulas used

Monthly interest = amount borrowed × annual rate / 12

Monthly insurance = amount borrowed × annual insurance rate / 12

Monthly payment = monthly interest + monthly insurance

The capital to repay at the end stays equal to the amount borrowed. The total interest cost equals monthly interest × number of months, and the total cost of credit adds the total insurance cost on top.

Worked example

For a loan of €150,000 over 10 years (120 months) at a rate of 3%, with no insurance:

• Monthly interest: 150,000 × 3% / 12 = €375 per month;
• Total interest cost: 375 × 120 = €45,000;
• Capital to repay at the end: €150,000 in a single payment.

Results are provided for information only and do not constitute a loan offer.