Loan Amortization Calculator
Generate a complete month-by-month repayment schedule and see exactly how much interest you'll pay.
Monthly Payment
60 monthly payments
An amortisation schedule shows you something a loan advertisement never will: how little of your early payments actually reduces the debt. On a 30-year mortgage, your first payment might be 80% interest. This calculator lays out every month so you can see exactly where your money goes.
How amortisation works
Every payment you make splits into two parts: interest on the balance you still owe, and principal that reduces that balance. The payment amount stays constant, but the split shifts every single month. Early on, your balance is large, so the interest portion is large and very little goes to principal. As the balance shrinks, less interest accrues, and more of the same payment attacks the principal. By the final year, almost the entire payment is principal. This is why a 30-year mortgage at 6% costs you more in interest than the house did. And it is why an extra payment in year one is worth vastly more than the same payment in year twenty — early money removes principal that would otherwise generate interest for decades.
The formula
Monthly Payment = P × r ÷ (1 − (1 + r)^−n)
Where:
P = principal r = annual rate ÷ 12 n = total months
Each month:
Interest = Remaining Balance × r
Principal = Payment − Interest
Balance = Balance − Principal
Example: $50,000 at 7.5% over 5 years
Payment = $1,001.90/month
Total interest = $10,114The payment formula looks intimidating but the logic is simple: it solves for the fixed amount that reduces the balance to exactly zero over n months while covering the interest each month.
Paying less interest
- 1Extra payments early are worth several times the same payment later. An extra $100 in month one removes $100 of principal that would have accrued interest for the full term. The same $100 in the final year saves almost nothing.
- 2Always confirm your extra payment goes to principal. Some lenders default to applying it as a prepayment of the next scheduled instalment, which does not reduce your interest at all. You often have to explicitly instruct them.
- 3Look at total interest, not the monthly payment. A longer term always shows a smaller, friendlier monthly figure — and quietly costs you dramatically more. That comparison is exactly what lenders hope you skip.
- 4Check for prepayment penalties before overpaying. Some loans charge a fee for early repayment, which can wipe out the interest you saved.
- 5Biweekly payments are a real trick. Paying half your monthly amount every two weeks means 26 half-payments a year — one extra full payment annually, which can cut years off a mortgage without you noticing.
Frequently asked questions
Why is so much of my early payment interest?
Because interest is charged on your remaining balance, and early on that balance is nearly the full loan. On a $300,000 mortgage at 6%, the first month's interest alone is $1,500. If your payment is $1,800, only $300 reduces the debt.
Does making extra payments really help?
Enormously, especially early. Every dollar of principal you remove is a dollar that stops accruing interest for the remaining term. On a 30-year mortgage, an extra $200 a month can cut roughly seven years and tens of thousands in interest.
Should I choose a longer term for lower payments?
Only if the shorter term genuinely does not fit your budget. A 30-year loan versus a 15-year at the same rate roughly doubles your total interest. The monthly number looks kinder; the total is much crueller.
What is the difference between interest rate and APR?
The interest rate is what accrues on your balance. The APR includes fees, points, and other costs, expressed as an annual rate. APR is the better comparison number between lenders. This calculator uses the interest rate.
Does this work for car loans and personal loans?
Yes. Any fixed-rate loan with equal monthly payments amortises identically — mortgages, car finance, personal loans, and most student loans. The only difference is the numbers you type in.