Generate a full amortization schedule for any fixed-rate loan.
Monthly payment
—
Total interest
—
Total paid
—
Annual amortization (year-end balances)
Year
Principal
Interest
Balance
Worked example
Take a $300,000 loan at 6.5% on a 30 year, or 360 month, term. The level monthly payment that clears it
on schedule is about $1,896.20. Over all 360 payments you pay about $682,633, of which the original
$300,000 is principal and the remaining $382,633 is interest, so you pay more in interest than you
borrowed. The early years are interest-heavy. In year one your twelve payments total roughly $22,754, but
only about $3,353 of that reduces the balance while about $19,401 is interest, leaving a balance near
$296,647 at the end of the first year. As the balance falls, each payment carries less interest and more
principal, so the principal share rises every year until the final payments are almost entirely
principal. That shifting split is exactly what the year by year schedule above shows for your own inputs.
Item
Amount
How it is calculated
Amortization spreads a loan into equal monthly payments that cover both interest and principal. The tool
first solves for the level payment using the standard formula, which depends on the loan amount, the
monthly rate, and the number of months. It then walks the schedule one month at a time. Each month the
interest due is the current balance times the monthly rate, the principal portion is the payment minus
that interest, and the balance drops by the principal paid. Because the balance shrinks every month, the
interest portion of each fixed payment falls while the principal portion grows, which is why a loan feels
like it barely moves in the early years and then accelerates near the end. The annual table groups these
monthly steps into years so you can see how principal, interest, and the remaining balance evolve without
reading 360 separate rows.
Frequently asked questions
What is amortization?
The process of paying off a loan with regular payments. Each payment has a fixed total but a varying split: early payments are mostly interest, later payments are mostly principal.
Why do I pay more interest early in my mortgage?
A fixed-rate mortgage uses a level payment that covers both interest and principal each month. In the early years, your outstanding balance is large, so the interest portion (balance times monthly rate) is large, leaving only a small slice for principal reduction. As principal slowly decreases, the interest portion shrinks and the principal portion grows. By roughly the midpoint of a 30-year loan, the split is roughly 50/50. This front-loading of interest is not a hidden fee; it is a mathematical consequence of how the loan balance changes over time.
Does paying extra principal actually save money?
Yes, significantly. Extra principal payments immediately reduce the outstanding balance, which means less interest accrues each subsequent month. On a $400,000 30-year loan at 6.5%, paying $200 extra per month eliminates roughly 5 years and saves about $80,000 in interest. The savings compound: each extra dollar paid reduces the base on which future interest is calculated. Even a single lump-sum payment of $1,000 in year 5 saves more in interest than $1,000 paid in year 25, because it has more time to reduce the base.
What is the difference between a 15-year and 30-year amortization?
A 15-year loan pays off twice as fast, so the balance drops much faster in the early years. The monthly payment is higher (roughly 50-65% more than a 30-year payment at the same rate), but total interest paid is dramatically less. A 30-year loan has a lower required payment, which preserves cash flow flexibility, but you pay roughly 2-2.5 times more total interest over the life of the loan. Most financial planners recommend a 30-year loan for flexibility and a commitment to extra payments rather than being locked into the higher 15-year payment.