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Exact amortization math for any loan or mortgage — and what an extra payment really saves. Informational only, not financial advice.
Principal vs interest
Year-by-year amortization
| Year | Principal repaid | Interest paid | Balance left |
|---|
How it works
The monthly payment comes from the standard amortization formula: M = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the amount borrowed, r the monthly interest rate (annual rate ÷ 12) and n the number of months. Each month, interest is charged on the remaining balance and the rest of your payment reduces it — which is why early payments are mostly interest, and why the balance falls slowly at first, then accelerates. The schedule below shows that shift for every year of your loan. Everything is computed on your device; no figures are sent anywhere.
FAQ
What is the difference between the interest rate and APR?
The interest rate is the cost of borrowing the principal itself. APR (annual percentage rate) also includes mandatory fees — arrangement fees, broker fees, certain insurance — spread over the loan, which makes it the fairer number for comparing offers. A loan with a 5.0% rate and high fees can cost more than a 5.4% rate with none. This calculator models the interest rate; enter the APR if you want fees included.
Why are early payments mostly interest?
Interest each month is charged on the balance still owed. At the start, that balance is the full loan amount, so interest takes the biggest slice of a fixed payment. As the balance falls, the interest slice shrinks and more of the same payment goes to principal — the schedule table shows this shifting every year.
How much does an extra payment really save?
Enter any amount in the extra payment field: every extra unit goes straight to principal, which reduces all future interest on that amount for the rest of the term. Early extra payments save the most because they compound the longest. The calculator shows the interest saved and the time knocked off — often several years for a modest monthly overpayment.
Is this financial advice?
No. This tool performs standard amortization mathematics on the numbers you enter. It doesn’t know your lender’s exact rules (daily vs monthly interest, fees, overpayment penalties, rate changes on variable loans). Always confirm figures with your lender before making decisions.