Amortization Calculator: See Where Every Payment Goes

Take a $300,000 home loan at 7% for 30 years and your monthly payment is $1,995.91. Over the life of the loan you will hand the lender $718,527. That is $418,527 in interest, more than the house loan itself. But the bigger surprise is when you pay it. In the first month, $1,750 of your payment is interest and just $246 reduces your loan. An amortization calculator shows you that split for every single payment, so you can see exactly what you owe, what you have paid off, and what an extra payment would really save. Quick answer: an amortization calculator takes your loan amount, interest rate and term, and produces an amortization schedule: a month-by-month table showing how much of each payment goes to interest, how much goes to principal, and the balance left after it. Enter your loan amount, interest rate and term in the Amortization Calculator on this page to see your own schedule. This guide goes further than the usual explanation. Along with the formula and a full sample schedule, you will find three ideas you are unlikely to see elsewhere: the Rule of 69 for spotting when your loan turns in your favour, the halfway myth, and the extra payment timing curve that shows why a prepayment in year 1 is worth nearly six times the same prepayment in year 20. What is amortization? Amortization is the process of paying off a loan through equal, regular payments, where each payment covers that month's interest first and puts whatever is left toward the principal. The payment stays the same every month. What changes is the mix inside it: • Interest is charged on the balance you still owe. At the start the balance is at its highest, so the interest part is at its largest. • Principal is the part that actually reduces your loan. It starts small and grows every month, because each month's interest is calculated on a slightly smaller balance. This is why amortized loans feel slow at first and fast at the end. The chart below shows all 360 payments of a $300,000, 7%, 30-year loan grouped by year.

In year 1 you pay $23,951 and only $3,047 of it (13%) reduces your loan. By year 30 almost the entire payment is principal. The month when principal overtakes interest is the moment your loan starts working for you, and as you will see below, you can predict it with simple division. Amortization applies to almost every fixed-payment loan: home loans and mortgages, car loans, personal loans, student loans and most business term loans. The amortization formulas Every amortization calculator runs on four short formulas. You only need three inputs: the loan amount (P), the monthly interest rate (r) and the number of payments (n). • r = annual interest rate ÷ 12 ÷ 100. At 7%, r = 0.0058333 • n = years × 12. For 30 years, n = 360

1. Monthly payment Payment = P × r × (1 + r)^n ÷ [(1 + r)^n − 1] $300,000 × 0.0058333 × 8.1165 ÷ 7.1165 = $1,995.91
2. Interest part of any payment Interest = Balance before the payment × r Month 1: $300,000 × 0.0058333 = $1,750.00
3. Principal part of any payment Principal = Payment − Interest Month 1: $1,995.91 − $1,750.00 = $245.91
4. New balance New balance = Old balance − Principal part Month 1: $300,000 − $245.91 = $299,754.09 Repeat steps 2 to 4 for every month and you have the full amortization schedule. A calculator does all 360 rows in a fraction of a second. A useful shortcut: the principal part of payment number k equals Payment ÷ (1 + r)^(n − k + 1). This single line is what makes the Rule of 69 below possible. Sample amortization schedule Here is what the schedule looks like for the same loan: $300,000 at 7% for 30 years, monthly payment $1,995.91. First three payments and key milestones Payment no. Interest Principal Balance left Total interest paid so far 1 $1,750.00 $245.91 $299,754.09 $1,750 2 $1,748.57 $247.34 $299,506.75 $3,499 3 $1,747.12 $248.78 $299,257.97 $5,246 12 (end of year 1) $1,733.75 $262.15 $296,952.57 $20,903 60 (year 5) $1,649.32 $346.58 $282,394.77 $102,149 120 (year 10) $1,504.58 $491.32 $257,437.15 $196,946 180 (year 15) $1,299.39 $696.51 $222,056.60 $281,320 240 (year 20) $1,008.51 $987.40 $171,900.23 $350,918 300 (year 25) $596.15 $1,399.76 $100,797.31 $399,570 360 (final) $11.58 $1,984.33 $0.00 $418,527 Look at the first five years: you pay $119,754 in total, but your balance falls by only $17,605. That is the reality of front-loaded interest. The same pattern in India: ₹50 lakh at 8.5% for 20 years EMI: ₹43,391. Total interest over 20 years: ₹54.14 lakh, more than the loan itself. EMI no. Interest Principal Balance left 1 ₹35,417 ₹7,974 ₹49,92,026 60 (year 5) ₹31,297 ₹12,094 ₹44,06,359 120 (year 10) ₹24,920 ₹18,471 ₹34,99,691 180 (year 15) ₹15,181 ₹28,211 ₹21,14,937 240 (final) ₹305 ₹43,086 ₹0 The currency and rate change, but the shape is identical. It is the maths of amortization, not the habit of any one bank. The Rule of 69: when does your loan start working for you? There is a month in every amortized loan when the principal part of your payment finally becomes larger than the interest part. Most people never find out when it is. You can work it out in your head. The Rule of 69: principal overtakes interest about 69 ÷ (annual interest rate) years before your final payment. It does not matter how big the loan is or whether it runs for 15, 20 or 30 years. Only the interest rate decides how far from the end the crossover sits.

Two quick examples • US: $300,000 at 7% for 30 years. 69 ÷ 7 = 9.9 years before the end, so the crossover comes at about year 20. The full schedule confirms it: payment number 242. • India: ₹50 lakh at 8.5% for 20 years. 69 ÷ 8.5 = 8.1 years before the end, so the crossover comes at about year 12. The schedule shows EMI number 143, in year 12. Why it works From the shortcut formula above, the principal part of payment k is Payment ÷ (1 + r)^(months left + 1). Principal is bigger than interest once it is more than half the payment, which happens when (1 + r) raised to the months remaining drops to 2 or less. Solving that gives months remaining = ln 2 ÷ ln(1 + r), which is roughly 0.693 ÷ r. Convert r to an annual percentage and months to years and you get 69 ÷ rate. If the number looks familiar, it is the same maths as the Rule of 72 for doubling money, just in reverse: the crossover point is exactly the time your remaining balance would take to double at the loan's rate. What it tells you • At high rates, you wait longer. A 30-year loan at 10% stays interest-heavy until year 23. At 5% the crossover is in year 16. • Short loans can skip the interest-heavy phase entirely. If the loan term is shorter than 69 ÷ rate, principal beats interest from the very first payment. A 10-year loan at 5% (69 ÷ 5 = 13.9 years) is one example. • Before the crossover, each extra payment works hardest. That is the subject of the timing curve further down. The halfway myth Ask most borrowers how much they owe halfway through a 30-year loan and they will say "about half". The real answer is usually closer to three quarters.

On the $300,000 loan at 7%, after 15 years and $359,263 of payments, you still owe $222,057. You have cleared just 26% of the loan in 50% of the time. You only cross the true halfway mark (half the loan repaid) at payment 261, in year 22. Loan Still owed at half the term Half the loan repaid at 30 years at 4% 64.5% Year 20 (64% of the term) 30 years at 7% 74.0% Year 22 (72% of the term) 30 years at 10% 81.7% Year 24 (78% of the term) 20 years at 8.5% 70.0% Year 14 (69% of the term) 15 years at 6% 61.0% Year 10 (61% of the term) Why this matters in real life • Selling early: if you sell a home after 7–10 years, your equity comes mostly from your down payment and any price rise, not from loan repayment. • Refinancing: restarting a fresh 30-year loan in year 10 pushes you back to the interest-heavy start of the curve. Compare total interest, not just the new monthly payment. • Planning: if you expect to be debt-free by a certain age, check the actual balance in your schedule for that year rather than assuming a straight line. Higher rates and longer terms make the gap worse. Shorter loans and lower rates bring the curve closer to a straight line. The extra payment timing curve An extra payment goes straight to principal, so it stops interest from being charged on that amount for the rest of the loan. The earlier it lands, the more months of interest it cancels. The difference is bigger than most people expect.

The same $10,000, paid once: Paid in Interest saved Loan ends Saving per $1 prepaid Year 1 $62,662 36 months sooner $6.27 Year 5 $46,327 28 months sooner $4.63 Year 10 $30,671 20 months sooner $3.07 Year 15 $19,182 14 months sooner $1.92 Year 20 $10,840 10 months sooner $1.08 Year 25 $4,830 7 months sooner $0.48 A dollar prepaid in year 1 saves nearly six times what the same dollar saves in year 20. Notice too that the saving drops close to $1 per $1 around year 20, exactly where the Rule of 69 puts the crossover for a 7% loan. That is not a coincidence: both happen when the months remaining equal the time money takes to double at the loan's rate. After that point, each prepaid dollar saves less than itself in interest. Small, regular extras add up • US: paying $200 extra every month on the $300,000 loan saves $116,640 in interest and clears it 85 months (7 years) early. • India: paying one extra EMI (₹43,391) each year on the ₹50 lakh loan saves about ₹10.29 lakh in interest and closes it 39 months early. Before you prepay, check three things

1. Prepayment charges. In India, banks cannot charge a prepayment penalty on floating-rate home loans taken by individuals. Fixed-rate loans and many loans in other countries may carry a fee, so read your agreement.
2. Reduce tenure or reduce EMI? Lenders usually let you choose. Keeping the payment the same and shortening the term saves far more interest.
3. Your emergency fund. Money prepaid into a loan is hard to get back. Keep 3–6 months of expenses aside first, and clear higher-rate debts such as credit cards before prepaying a home loan. How to use the Amortization Calculator
4. Enter the loan amount. Use the amount you are borrowing, not the property price.
5. Enter the annual interest rate. Use the rate in your loan offer. For a floating-rate loan, run it again at 1–2% higher to see the risk.
6. Enter the loan term. In years or months, as your calculator asks.
7. Add extra payments (optional). Try a one-time prepayment or a small monthly extra to see how much interest and time it saves.
8. Read the summary. Note the monthly payment, total interest and total amount paid.
9. Open the full schedule. Scroll or download it to see every payment's interest, principal and balance. Five things to look for in your schedule • Your crossover month. The first row where principal is bigger than interest. Check it against 69 ÷ your rate. • Interest in the first 5 years. This tells you how little equity you build early on. • Your balance in the year you might sell or refinance. Use this number, not a guess, when planning. • Total interest as a share of the loan. At 7% for 30 years it is 140% of what you borrowed; at 7% for 15 years it falls to about 62%. • The effect of one extra payment. Compare the payoff date with and without it. Common mistakes to avoid • Judging a loan by its monthly payment alone. A 30-year loan has a lower payment than a 15-year loan, but at 7% it costs $418,527 in interest versus $185,367. Always check the total interest line. • Assuming equity builds evenly. As the halfway myth shows, your balance falls slowly at first. Plan sales and refinances with the real balance from your schedule. • Prepaying late and expecting big savings. After the crossover, a prepaid dollar saves less than a dollar of interest. The best time to prepay is early. • Choosing "reduce EMI" after a prepayment by default. Reducing tenure instead usually saves several times more interest. • Forgetting taxes, insurance and fees. A mortgage payment in the US often includes property tax and insurance (escrow). The amortization schedule covers only principal and interest. • Ignoring rate resets. A floating or adjustable-rate loan will need a new schedule each time the rate changes. Re-run the calculator after every reset. Frequently asked questions What is an amortization schedule? It is a table that lists every payment on a loan, showing how much goes to interest, how much goes to principal and the balance left after each payment. Why do I pay so much interest at the start of a loan? Interest is charged on the balance you owe, and the balance is highest at the start. As you repay principal, the balance falls, so each month's interest falls and more of the same payment goes to principal. What is the Rule of 69 for loans? It is a quick estimate of when principal overtakes interest in your payments: about 69 ÷ the annual interest rate years before the final payment. At 7%, that is about 9.9 years before the end. Is it better to prepay a loan early or late? Early. On a $300,000 loan at 7% for 30 years, a $10,000 prepayment in year 1 saves $62,662 in interest, but the same amount in year 20 saves only $10,840. Does an amortization calculator work for car and personal loans? Yes. Any loan repaid in equal regular payments at a fixed rate follows the same amortization formula, whatever its size or purpose. What is negative amortization?

It happens when your payment is smaller than the interest due, so the unpaid interest is added to your balance and the loan grows instead of shrinking. Standard fixed-payment home loans do not do this. How is amortization different from depreciation? In lending, amortization means paying down a loan over time. In accounting, the same word also means spreading the cost of an intangible asset (such as a patent) over its useful life, while depreciation does the same for physical assets. Can I download my amortization schedule? Most amortization calculators let you view the full schedule, and many let you save or print it. Your lender can also provide an official schedule for your loan. Final thoughts An amortization schedule turns a loan from a single monthly number into a story you can read: where your money goes, when the loan turns in your favour, and how much a well-timed extra payment can save. Remember the three ideas from this guide. Use the Rule of 69 to find your crossover point. Do not trust the straight line; check your real balance because of the halfway myth. And follow the timing curve: prepay early, when every extra dollar or rupee works hardest. Run your own numbers in the Amortization Calculator on this page, then try one extra payment to see how much interest you could keep. Disclaimer: This article and calculator are for general information only and are not financial advice. The examples assume a fixed interest rate and equal monthly payments; your lender's figures may differ because of fees, rounding, rate changes or payment dates. Always confirm details with your lender or a licensed adviser before making financial decisions.