Amortization Calculator

What an amortization schedule shows

Amortization is paying off a loan in equal installments. Each payment covers the interest that built up since the last one, and whatever is left reduces the balance. The schedule lists, for every period, how much went to interest, how much to principal, and what you still owe.

On a long mortgage the split is lopsided at first: in the early years most of each payment is interest. That's why extra payments early in the loan save the most — every dollar of principal you remove stops collecting interest for the rest of the term.

How extra payments save money

An extra principal payment doesn't lower your required payment; it shortens the loan. Even small amounts compound: on a 30-year mortgage, an extra $100 to $200 a month typically cuts years off the term and saves tens of thousands in interest.

Before paying extra, make sure the lender applies it to principal (not to next month's payment), check for prepayment penalties, and weigh it against higher-interest debts or an emergency fund.

How each row is calculated

Example

1. $300,000 at 6.5% for 30 years has a payment of $1,896.20.
2. First month: interest = 300,000 × 0.065 ÷ 12 = $1,625.00, so only $271.20 reduces the balance.
3. Adding $200 a month pays the loan off about 6 years early and saves roughly $100,000 in interest (see the calculator for exact figures).

Frequently asked questions