How Amortization Works
A fixed-rate mortgage keeps the same payment every month, but the split between interest and principal changes constantly. Each month the lender charges interest on the current balance, and whatever is left of your payment reduces the principal. Because the balance is highest at the start, early payments are interest-heavy. As you chip away at the balance, the interest portion shrinks and the principal portion grows.
The calculator uses the standard amortization formula to find your monthly payment, then walks month by month, recording how much goes to principal and interest and what balance remains. It rolls those into a clean yearly table so you can see the trajectory at a glance.
Worked Example
Take a $200,000 loan at 5% over 30 years. The monthly payment lands at about $1,073.64, and over the full term you pay roughly $186,512 in interest, nearly as much as the home itself. In year one, almost $9,900 of your payments go to interest and only about $3,000 reduces principal. By the final years, that ratio is reversed.
Now add $200 extra per month. That extra goes entirely to principal, so the balance falls faster, future interest is charged on less money, and the loan pays off years early, saving tens of thousands in interest. The calculator shows the exact interest saved when you enter an extra payment.
Practical Tips
Attack principal early. Extra payments in the first decade have the biggest impact because they eliminate the most future interest. The same dollar applied in year 25 saves very little.
Check the balance before you sell or refinance. The yearly table tells you exactly what you will owe at any point, which is essential for estimating sale proceeds or refinance break-even.
Round up your payment. Even rounding a $1,073 payment up to $1,150 quietly shortens the loan and trims interest without straining your budget.