Amortization Calculator
This amortization calculator shows the shape of your loan's repayment, not just the totals — how much of your payment goes to interest versus principal in year 1, what you'll still owe at the halfway point, and the total interest over the full term. Enter your loan amount, rate and term to see exactly how a reducing-balance loan front-loads interest and back-loads principal, which is the single most misunderstood part of how loans actually work.
The amount you're borrowing — e.g. a $300,000 mortgage or a $30,000 auto loan.
The reducing-balance rate on your loan.
The full repayment period — e.g. 30 years for a typical US mortgage.
Interest paid in year 1
$19,401
How much of your first year's payments is pure interest — e.g. $19,401 of a $300,000 loan's first-year payments, at 6.5% over 30 years.
The rest of year 1's payments — this is the only part actually reducing what you owe.
What you'll still owe when you're exactly halfway through the term — usually far more than half the original loan.
Every dollar of interest across the entire loan — on a 30-year term this often exceeds the amount borrowed.
How to use this amortization calculator
- 1Loan amount and rate: enter the figures from your loan offer or current statement.
- 2Loan term: the full repayment period — longer terms dramatically increase how front-loaded the interest is.
- 3Compare 'interest paid in year 1' against 'principal paid in year 1' — on a 30-year mortgage, interest often makes up 80%+ of the first year's payments.
- 4Check the balance at the halfway point against half the original loan amount — the gap is the clearest illustration of how amortization actually works.
Understanding your results
Interest paid in year 1 and principal paid in year 1 split your first year of payments into what's pure cost versus what's actually reducing your debt — early payments are overwhelmingly interest because interest is charged on the full outstanding balance, which is largest at the start. Balance at the halfway point is the number that surprises most borrowers: on a 30-year loan, you'll typically still owe well over half the original amount at year 15, because principal repayment accelerates only in the loan's later years. Total interest over the full term shows the complete cost of borrowing — on long, low-rate loans it can still exceed the amount borrowed.
The formula
Each month: Interestₘ = Balanceₘ₋₁ × r, Principalₘ = Payment − InterestₘEvery monthly payment is split between that month's interest (the outstanding balance times the monthly rate) and principal (whatever's left of the fixed payment). Because the balance shrinks a little each month, next month's interest is slightly smaller and next month's principal portion slightly larger — a self-reinforcing shift that starts slow and accelerates. This is why the split can't be captured by one static ratio: it has to be simulated month by month across the full schedule to see the true shape, which is exactly what this calculator does.
A worked example
A $300,000 loan at 6.5% over 30 years: in year 1, about $19,401 of your payments is interest and only $3,353 is principal — over 85% of every dollar paid in year one buys you nothing but the right to keep borrowing. By the halfway point (year 15), the balance has only fallen to about $217,677 — you've paid 15 years of payments but still owe over 72% of the original loan. Total interest over the full 30 years comes to roughly $382,633 — more than the amount borrowed. Shortening the term or making extra principal payments early (see our loan prepayment calculator) is far more powerful than doing the same later, precisely because of this front-loaded shape.
Notes for the UK, US and India
In the US, this reducing-balance amortization schedule underpins nearly every fixed-rate mortgage, auto loan and federal student loan, and lenders are required to disclose the schedule via TILA (Truth in Lending Act) documents. In the UK and India, the identical maths applies to repayment mortgages and reducing-balance home/EMI loans respectively — only the terminology and typical term lengths differ (25 years is standard in the UK, 20 in India, 30 in the US). Wherever you are, the practical lesson is the same: extra payments made early in the term save disproportionately more interest than the same extra payment made later, because they cut a balance that would otherwise be accruing interest for many more years.
Frequently asked questions
Why is my mortgage payment mostly interest in the early years?+
Because interest is charged on the outstanding balance, which is largest right after you borrow. As you pay down principal each month, the balance shrinks and less interest accrues, so a growing share of each fixed payment goes to principal — this shift accelerates especially in the loan's final third.
What is an amortization schedule?+
A month-by-month (or year-by-year) breakdown of every payment showing how much is interest and how much is principal, and the remaining balance after each payment — this calculator gives you the key snapshots (year 1, halfway, total) rather than all 360 monthly rows.
Does a shorter loan term change the interest/principal split?+
Yes — shorter terms shift the split toward principal faster, because a higher required payment covers more than just the interest each month from the very start. That's part of why 15-year mortgages pay off so much faster than 30-year ones for a similar rate.
How does an extra payment affect the amortization schedule?+
An extra payment goes entirely to principal, which reduces the balance that all future interest is calculated on — effectively skipping ahead in the schedule. See our loan prepayment and mortgage overpayment calculators to model this directly.
Is amortization the same as depreciation?+
No — amortization describes paying down a loan's principal over time; depreciation describes an asset losing value over time. They're unrelated concepts that happen to sound similar and are sometimes confused in accounting contexts.