Amortization calculator

Reembun. (2026, July 28). Amortization calculator. https://reembun.com/amortization-calculator

How amortisation works

Each payment is identical in size, but its composition changes every month. Interest is charged on whatever you still owe, so the interest portion shrinks as the balance falls and the principal portion grows to compensate.

interest this month  = balance × (annual rate ÷ 12)
principal this month = payment − interest this month
new balance          = balance − principal this month

The payment itself comes from the standard annuity formula:

M = P × [ r(1 + r)ⁿ ] / [ (1 + r)ⁿ − 1 ]

This calculator builds the schedule month by month rather than using a closed form, so the final payment absorbs any rounding remainder, exactly as a lender’s statement does.

A worked example

$300,000 at 6.5% over 30 years:

• Monthly payment: $1,896.20
• Total interest: $382,633
• Total repaid: $682,633

The first payment is $1,625 interest and $271 principal. The last is almost entirely principal. The crossover, where principal first exceeds interest, arrives at payment 220, in year 18.

Payment	Interest	Principal	Balance
1	$1,625.00	$271.20	$299,728.80
60	$1,533.48	$362.72	$282,673
120	$1,392.09	$504.11	$256,522
220	$1,046.55	$849.65	$192,251
360	$10.22	$1,886.98	$0

The effect of extra payments

Because interest is charged on the balance, money paid early is worth far more than money paid late.

On the loan above:

Extra per month	Paid off in	Interest saved
$0	30.0 years	none
$100	26.5 years	$59,000
$200	24.0 years	$99,000
$500	19.0 years	$175,000

An extra $200 a month is $2,400 a year, or $57,600 over the 24 years it takes to clear the loan, and it removes $99,000 of interest. That is a return no savings account matches, and it is risk-free in a way investments are not.

Two things to check with your lender

Is the overpayment applied to principal? Some systems credit an unallocated extra payment against the next scheduled instalment, which advances your due date but does nothing to the balance or the interest. This has to be requested explicitly at many lenders.

Is there a prepayment penalty? Federal rules restrict them on US mortgages, but personal and auto loans are less protected, and some carry a penalty for clearing the balance within the first few years.

Reading a schedule properly

Two numbers repay the effort of looking at the table.

The crossover month tells you how long you are effectively renting money rather than buying equity. On a 15-year loan it arrives in year 4; on a 30-year loan, year 18. That difference is the real argument for a shorter term, more than the headline interest saving.

The balance at the point you expect to move or refinance is usually more relevant than the total interest over the full term. Most mortgages are not held to maturity, and the balance after five or seven years is what will actually determine your position.