When you take out a mortgage or loan, your monthly payment is mostly interest at first — and mostly principal later. That's amortization, and understanding it can save you thousands.
What Is an Amortization Schedule?
An amortization schedule is a table showing every payment over the life of a loan, split into:
- Principal: The amount that reduces your balance
- Interest: The cost of borrowing, recalculated each month
Why Early Payments Are Mostly Interest
Your interest each month is calculated on your remaining balance. Early on the balance is large, so interest is large. As you pay down the principal, the interest shrinks.
Example: $250,000 Mortgage at 6% for 30 Years
| Year | Monthly Payment | Goes to Interest | Goes to Principal | Remaining Balance |
|---|---|---|---|---|
| 1 | $1,499 | $1,245 | $254 | $246,800 |
| 10 | $1,499 | $1,065 | $434 | $208,300 |
| 20 | $1,499 | $743 | $756 | $123,900 |
| 30 | $1,499 | $7 | $1,492 | $0 |
The Power of Extra Payments
Paying just $100 extra per month on that $250,000 mortgage:
- Shortens the loan by ~5 years
- Saves ~$34,000 in interest
Using Our Calculators
- Mortgage Calculator — full amortization schedule with chart
- Loan Calculator — compare terms and payments
- Credit Card Payoff Calculator — escape high-interest debt faster
💡 Pro Tip: Even one extra payment per year made early in the loan has an outsized impact. Use our calculators to model your own numbers.
*See your full amortization schedule with our free Mortgage Calculator.*
