Learn / Amortization Explained
Amortization Explained
Amortization is the schedule that splits each payment between interest and principal. Early on you pay mostly interest; later, mostly principal.
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Why early payments are mostly interest
Interest is charged on the remaining balance, which is largest at the start. So your first payments cover a lot of interest and little principal. As the balance shrinks, more of each payment goes to principal.
How extra payments help
Any extra amount goes straight to principal, which lowers the balance and all the future interest on it. Small regular extra payments can cut years off a 30-year loan.
See your schedule
The calculator builds a year-by-year amortization schedule so you can watch the balance fall and see total interest over the life of the loan.
Put it into numbers. The calculator estimates your payment and compares every loan type.
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Frequently asked questions
What is amortization?
The schedule that splits each mortgage payment between interest and principal so the balance reaches zero at the end of the term.
Why is most of my early payment interest?
Because interest is charged on the balance, which is highest at the start of the loan.
Do extra payments save money?
Yes. Extra principal lowers the balance and all the future interest on it, and it shortens the loan.
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