A typical mortgage loan involves paying both the principal and interest each month. Over time the mortgage is slowly paid off. Many mortgages are for 30 year terms.
An interest only mortgage offers a borrower the chance to make a much lower payment.
The borrower pays only the interest due on a mortgage. No principal is being paid. As such the borrower pays a lower monthly payment. The principal on the loan is not paid off, so the loan size remains the same.
If you start with a $400,000 mortgage and make interest only payments on it for 5 years you will end up with a $400,000 mortgage at the end of those 5 years.
The monthly payment can be figured out with a free interest only mortgage calculator. These are available online, or you can do it by yourself.
The interest only payment is the principal of the loan multiplied by the interest rate. You divide this result by 12 to get the monthly payment.
For example, a $100,000 mortgage with a 12% interest rate will have an annual $12,000 interest payment. The monthly payment will be $1,000 (1/12 of the annual interest rate payment).
An online interest only mortgage calculator can help you compare this payment with a regular mortgage payment. You can see what the monthly savings can be, and your annual savings. Your annual savings with this payment type can be several thousands dollars or more depending on your loan size and rates.