Amortization Calculator
Visualize loan repayment. See principal vs interest breakdown year-by-year.
Wondering why your loan balance drops so slowly? Use our **Amortization Calculator** to visualize the math behind your payments and discover the "tipping point" where you finally start paying off real debt.
Loan Terms
Monthly Payment
| Year | Principal | Interest | Balance |
|---|
What is Amortization Calculator?
Understanding Amortization
**Amortization** is the process of spreading a loan into a series of fixed payments over time. While the total monthly payment remains constant, the split between **Principal** (what you owe) and **Interest** (what the bank keeps) changes every single month.
Who Should Use This?
- Homeowners: To see how little equity is built in the first 5-7 years of a 30-year mortgage.
- Refinancers: To check if restarting a new 30-year loan is worth resetting your amortization progress.
- Debt Payers: To see exactly how much interest is saved by making extra principal payments.
Why This Tool is Useful
Loans are "Front-Loaded" with interest. This tool reveals that ugly truth. For example, in the first year of a mortgage, it's common for 70-80% of your check to go straight to interest profit for the bank. Knowing this motivates you to pay extra.
When to Use It
Use this whenever you take out a loan, plan to refinance, or want to calculate a payoff strategy.
How to Use This Schedule
Generate your personalized roadmap:
- Loan Amount: The starting balance of the debt.
- Interest Rate: The annual rate (APR).
- Term: How many years the loan lasts (typically 15 or 30 for homes, 3-7 for cars).
The "Tipping Point"
On a 30-year mortgage, you typically don't pay more Principal than Interest until **Year 13 or 14**. Until then, the bank gets the majority of your monthly check!
Formula & Calculation
The formula calculates the Principal portion (P) of any specific payment number (k).
Where:
- M = Total Monthly Payment (constant)
- i = Monthly Interest Rate
- n = Total Number of Months
- k = The specific month number (e.g., Month 1 vs Month 60)
Example Calculation
Example 1: The 30-Year Mortgage
Scenario: $300,000 Loan at 6% Interest for 30 Years.
Total Interest Paid = $347,000
Year 1 Reality: You pay $21,500 in total payments. Only $3,600 goes to principal. The bank keeps $17,900 as interest. Ouch.
Example 2: The 15-Year accelerator
Scenario: Same $300,000 Loan, but 15 Years (often lower rate, say 5.5%).
Total Interest Paid = $141,000
Result: By paying $650 more per month, you save over $200,000 in total interest comparison to the 30-year loan! You also own the home 15 years sooner.
Explanation of Results
- Yearly Breakdown: The table sums up your 12 payments for each year.
- Balance: Notice how slowly this number drops in the first decade.
- Interest Column: This is the "cost" of renting the money for that year.
Reference Tables
30-Year vs 15-Year Progress ($300k Loan)
See the remaining balance after 10 years.
| Timepoint | 30-Year Loan Balance | 15-Year Loan Balance | Difference |
|---|---|---|---|
| Values after 5 Years | $279,000 | $223,000 | $56k Equity Gap |
| Values after 10 Years | $251,000 | $126,000 | $125k Equity Gap |
| Values after 15 Years | $213,000 | $0 (Paid Off) | Own Free & Clear |
Why use this calculator?
- Refinance Decisions: If you are 7 years into a loan, restarting a new 30-year loan resets the amortization clock, meaning you go back to paying mostly interest. Check the math first!
- Payoff Dates: See exactly which year you will be debt-free.
Frequently Asked Questions
Frequently Asked Questions
What is "Negative Amortization"?
This is a dangerous situation where your monthly payment is less than the interest generated. The unpaid interest gets added to your loan balance, so you owe more next month than you did this month. Avoid these loans!
Do extra payments change my monthly bill?
Usually, **No**. On a fixed loan, extra payments shorten the term (number of months), but the required monthly payment amount stays the same. To lower the monthly bill, you would need to "Recast" the mortgage.
What is Loan Recasting?
Recasting is when you make a large lump-sum payment and ask the lender to re-calculate your monthly payments based on the new lower balance, while keeping the same interest rate and term length.
Why is interest so high at the beginning?
Interest is calculated on the Outstanding Balance. At the start, your balance is huge (e.g., $300k), so the interest charge is huge. As you chip away at the balance, the interest charge naturally drops.
Key Terms & Definitions
Disclaimer: This calculator is for educational estimates. Actual bank schedules may vary slightly due to day-count conventions (360 vs 365 days) and rounding.
Last Updated: January 2026