Question 1

What is an amortization schedule?

Accepted Answer

An amortization schedule is a table showing each periodic payment on a loan, broken down into the interest and principal portions, along with the remaining balance after each payment. It reveals exactly when the loan is paid off and the total interest cost over the loan's life.

Question 2

Why do early loan payments go mostly to interest?

Accepted Answer

Interest is charged on the outstanding balance. When the balance is large (early in the loan), the interest portion of each payment is highest, leaving less to reduce principal. As the balance falls over time, interest charges shrink and more of each payment goes toward principal — this is amortization.

Question 3

How do I calculate the interest portion of a payment?

Accepted Answer

Monthly Interest = Current Balance × (Annual Rate ÷ 12). Principal Paid = Total Payment − Interest. For example, a $200,000 balance at 5% annual rate accrues $200,000 × 0.4167% = $833 monthly interest. If the total payment is $1,074, then $241 reduces the principal.

Question 4

What is negative amortization?

Accepted Answer

Negative amortization occurs when the monthly payment is less than the interest owed, causing the loan balance to grow instead of shrink. It can happen with some adjustable-rate mortgages or graduated-payment loans. It should generally be avoided as debt compounds upward over time.

Question 5

How much total interest will I pay over the life of my loan?

Accepted Answer

Total Interest = (Monthly Payment × Number of Payments) − Loan Principal. On a 30-year $300,000 mortgage at 4.5%, total payments are ≈$547,000 — meaning roughly $247,000 in interest, nearly equal to the original loan amount. Extra payments can cut this dramatically.

Amortization Calculator

Loan Details

Frequently Asked Questions

Amortization Calculator

Loan Details

Frequently Asked Questions

Related Calculators