Loan Payment Holiday Cost Calculator
Compare a full payment pause, interest-only payments, or a reduced payment on a fixed-rate loan. The estimate shows the balance after the holiday and the cost of catching up through a higher payment, a longer term, or a lump sum.
Normal monthly payment$1,863.93
- Interest charged during holiday
- $4,084.54
- Balance after holiday
- $254,084.54
- Temporary cash-flow relief
- $5,591.80
- Catch-up lump sum
- $5,622.14
- New payment to keep original payoff date
- $1,906.11
- Monthly payment increase
- $42.18
- Extra interest with higher payments
- $4,404.05
- Extra months at the original payment
- 1 year
- Extra interest with a longer term
- $15,310.03
Assumes a fixed rate, monthly interest application, and payments credited at the end of each month.
Excludes escrow, fees, late charges, and lender-specific capitalization or repayment rules.
How to use this calculator
- Enter the principal balance and number of scheduled monthly payments remaining just before the holiday begins.
- Use the fixed note rate that you expect to apply during the holiday and the rest of the term.
- Choose no payments, interest only, or a custom reduced payment and enter the reduced amount when needed.
- Compare the revised payment, extra months, and interest cost before discussing options with your servicer.
How a payment holiday changes a loan
A payment holiday does not usually make the loan disappear for those months. Under the common capitalization approach used here, interest continues to accrue on the opening balance each month. With no payment, that interest is added to the balance. An interest-only payment holds the balance steady, while a reduced payment can either slow the growth or pay some principal.
The normal principal-and-interest payment uses the ordinary-annuity formula:
P = B × r ÷ (1 − (1 + r)^−N)
- B is the balance before the holiday.
- r is the annual rate divided by 12 and 100.
- N is the number of scheduled payments still remaining.
For each holiday month, the calculator adds interest of opening balance × r, then subtracts the payment made that month. It compares that ending balance with the balance the loan would have reached if the normal payment had continued. Their difference is the catch-up lump sum needed immediately after the holiday to return to the original amortization path.
Comparing the recovery paths
To keep the original payoff date, the calculator re-amortizes the post-holiday balance over the months left after the holiday. The resulting payment is higher because there is a larger balance and less time to repay it. The extra-interest figure for this path includes the holiday payments and the higher payments, then subtracts the interest you would have paid without a holiday.
The longer-term comparison resumes the original payment after the holiday. Its payoff period is found from n = −ln(1 − r × B ÷ P) ÷ ln(1 + r). A partial final month is shown as a whole required payment month, with a smaller final payment implied. If the original payment does not exceed monthly interest on the post-holiday balance, the loan will not amortize at that payment and this comparison is undefined.
What moves the result and what it leaves out
A longer holiday, a higher rate, and a smaller payment during the holiday all increase the post-holiday balance. Interest-only payments avoid balance growth but do not provide the same cash-flow relief as a full pause. A custom payment above the normal payment is identified as an overpayment, not a payment holiday.
This is a planning model, not a lender program description. It assumes a fixed rate, monthly interest application, and immediate payment credit. It does not model daily accrual, late charges, modification fees, escrow, taxes, insurance, credit reporting, or programs that defer missed amounts without adding them to the main balance.
Worked example
Suppose a $250,000 balance has 240 monthly payments left at 6.5%, and three payments are fully paused. The normal principal-and-interest payment is $1,863.93. During the pause, the balance grows to $254,084.54 and interest charged during the three months is $4,084.54.
Keeping the original payoff date then requires a payment of $1,906.11 for the remaining 237 months, an increase of $42.18 a month. Resuming the original payment instead takes 249 post-holiday payments, which is 12 more months than were left after the holiday. The exact figures can differ if a lender uses daily interest, a separate deferred balance, or a different repayment arrangement.
Common questions
Does interest continue during a loan payment holiday?
Usually, yes. Many payment-pause and forbearance arrangements continue charging interest even when no payment is due, although the exact treatment depends on the contract and program. Ask whether accrued interest is capitalized, deferred separately, or due later as a lump sum.
How much will my payment rise after a payment holiday?
The rise depends on the balance, rate, months remaining, holiday length, and payments made during the holiday. If the lender keeps the original maturity date, it must spread the higher post-holiday balance over fewer payments. Interest-only payments generally produce a smaller increase than no payments.
Is it cheaper to raise my payment or extend the loan term?
Raising the payment to keep the original payoff date usually costs less interest because the balance is repaid sooner. Extending the repayment period keeps the original payment lower but leaves the balance outstanding longer. The actual choices offered by a servicer may include a lump sum, a repayment plan, or a deferred balance instead.
What is the difference between a payment holiday, deferment, and forbearance?
The terms are used differently by lenders and countries. A payment holiday generally means a temporary pause or reduction, while forbearance is a lender-approved temporary change after financial difficulty. Deferment can mean missed amounts are moved to the end of the loan, sometimes without being added to the interest-bearing balance.
How does making interest-only payments change the cost?
An interest-only payment covers the interest charged for that month, so the modeled principal balance does not grow during the holiday. You still postpone scheduled principal reduction, which can require a higher payment later or more payments at the original amount. It generally costs less than making no payments during the same period.
Should escrow, taxes, or insurance be included in the payment?
No. Enter only principal and interest payments in this calculator. Mortgage escrow, property taxes, homeowners insurance, and similar charges have their own billing and shortage rules, which a payment holiday may not pause.