Calc interest only on mortgage calc- help?

[Jenny M.]

Hey I am trying to figure out interest only payments on a mortgage, how do I use the mortgage calculator to do the math? Thanks!

[Spencer Hogan]

@Jenny M. If you are trying to be more precise - You may also want to consider if the lender assumes interest payments based on a 360-day year or a 365-day year as well as the number of days in each month which could be 30 days or the actual number of days. Most loans assume a 360-day year and 30-day months (360 / 30 = 12). In that case, your calculation would be (Outstanding Loan Amount * (Interest Rate / 12)) = Monthly Interest Payment. The loan documents should tell you whether to use 360 vs 365 and 30 vs actual. These variations in assumptions surprisingly have a meaningful impact on your returns / interest payments over the course of the loan. Hope this helps.