How each payment splits between interest and principal over time
Amortization tracks the unpaid principal after every monthly payment. Unlike a payment-only estimate, this schedule shows when interest is charged, how much principal falls, and whether an extra payment shortens the term.
Every row begins with the amount still owed. Monthly interest is charged on that opening balance; the rest of the payment lowers principal. In early months, a larger balance makes the interest share larger. An extra principal payment changes all later rows, so the schedule is recalculated rather than subtracting a fixed number of months.
The complete monthly table ties each interest charge to its opening balance. An extra-payment comparison reruns the loan, so saved interest and payoff months reflect the changed balance path.
How opening balance, rate, original term and extra principal reshape payoff
The first three inputs fix the regular payment. The extra amount leaves that payment alone and reruns the schedule, so every later month starts from a lower balance.
- Opening loan balance
- The principal owed when the schedule begins. For a loan already in progress, enter today's balance with the whole years remaining rather than the original amount and term; if the rate is unchanged, the regular payment then comes out close to your current one. First-month interest is this balance times the monthly rate, 1,000 on 200,000 at 6%.
- Fixed annual interest rate
- Divided by 12 and charged on each month's opening balance. The rate decides how front-loaded the schedule is: at 6% on 200,000, the first 1,199.10 payment includes 1,000 of interest and only 199.10 of principal. At 0%, every payment goes entirely to principal and interest saved is always zero.
- Original term
- Whole years, multiplied by 12 to set the regular payment and the maximum number of rows. A 30-year term on 200,000 at 6% gives a 1,199.10 payment and 231,676.38 of total interest with no extra. The schedule can finish early but never runs past this term.
- Extra toward principal each month
- A fixed amount added to every payment and applied to principal after that month's interest. Its effect builds through the schedule: 100 extra on the 200,000 example cuts payoff to 295 months and saves 49,138.41, while 200 extra cuts it to 252 months and saves 79,800.51. It repeats monthly from the first row.
- Final payment cap
- The last row is limited to the remaining balance plus that month's interest, so the final payment is usually smaller than the regular one. That cap is why payoff and months saved are counted in whole rows rather than fractions of a month.
Steps
- Enter the opening balance, fixed annual note rate and original whole-year term.
- Add an optional extra monthly amount intended for principal; use 0 for the base schedule.
- Run the calculation, inspect the payoff path and open the monthly schedule to verify each row.
Reading tip: Open the schedule and compare the first row with a later one. If extra is entered, the saved-month and saved-interest figures compare against an otherwise identical schedule with no extra payment.
Repayment questions a month-by-month schedule answers
Review a repayment schedule
Inspect how each monthly payment is divided between interest and principal.
Explore extra payments
Compare the payoff date and total interest with a recurring principal-only extra amount.
Check the first bill
Estimate first-month interest from the opening balance and stated monthly rate.
Plan a debt payoff
See how many whole modeled payments remain under a fixed-rate schedule.
How the calculation works
- P / N
- Opening principal / original number of scheduled monthly payments.
- i / M
- Monthly decimal rate / fixed principal-and-interest payment.
- E
- Optional monthly payment directed to principal after current interest is covered.
- t / balanceₜ
- Month number / unpaid balance at the beginning of that month.
The schedule uses unrounded intermediate balances and caps the last payment at the amount due. Actual lender schedules can differ.
What every part means
- P / N
- Opening principal / original number of scheduled monthly payments.
- i / M
- Monthly decimal rate / fixed principal-and-interest payment.
- E
- Optional monthly payment directed to principal after current interest is covered.
- t / balanceₜ
- Month number / unpaid balance at the beginning of that month.
Calculate it step by step
Find the required regular payment from opening principal, monthly rate and months; use P/N at 0%.
Interest is charged before principal falls; E is the optional extra amount.
Stop at zero and reduce the final payment to avoid overpayment.
The engine runs each month at unrounded Decimal precision, including a separate no-extra comparison. Currency figures are rounded only for display, so adding displayed row values can differ slightly from the precise total.
See how Calculation Guide tests examples and handles calculation limits.
See it in practice
- Opening loan balance
- 1200 currency units
- Fixed annual interest rate
- 0 %
- Original term
- 1 whole years
- Extra toward principal each month
- 20 currency units
P = 1,200, rate = 0%, N = 12, E = 20: M = 100. Each month pays 120 toward principal, so balance reaches zero in 10 months; interest and interest saved are both 0.
- Regular monthly payment100
- First month interest0
Interpretation & limitations
How to read your result
A shorter payoff and lower total interest result when extra principal is actually applied each month. The first row shows the opening-balance interest; later interest should usually fall as the balance declines.
Where this estimate stops
This model assumes one fixed nominal rate, equal monthly periods and immediate principal reduction from extras. It omits fees, escrow, due-date effects, daily accrual and prepayment restrictions. Confirm a lender's actual allocation rule.
Frequently asked questions
01Does extra payment reduce next month's interest?
Yes in this model. The extra amount reduces this month's closing balance, which is the basis for next month's interest.
02Is the final payment always the regular amount?
No. The model caps the last payment at the remaining balance plus that month's interest.
03What happens at a zero rate?
The regular payment is principal divided by months. Extra payments shorten the schedule, but interest saved stays zero.
04Can a large extra amount overpay the loan?
No. The last modeled payment is capped at the balance plus current-month interest.
05Why do rounded rows not add exactly?
Calculation keeps more precision than the two-decimal display. A lender may round each month's balance differently.
06Does this model my mortgage taxes and insurance?
No. Only loan principal and interest enter the amortization rows; use Mortgage for a broader monthly housing budget.
07Can I model a single lump-sum prepayment instead of a monthly extra?
Not directly, because the extra field repeats every month. To approximate a lump sum paid now, subtract it from the opening balance. That also lowers the computed regular payment, so if your lender keeps the old payment and shortens the term instead, enter the difference between the old and new payment as the monthly extra.
Sources & references
Articles that use this calculator
- How to Read an Amortization Schedule, Row by RowEach row charges one month's interest on the balance you still owe and uses the rest of the fixed payment to cut that balance. Because the balance is largest at the start, early payments are mostly interest, and the split only tips toward principal late in a long loan.
- Mortgage Payment Breakdown: PITI, PMI and HOA ExplainedA monthly housing cost has up to six parts: principal and interest go to the loan, taxes and insurance are often collected through escrow, mortgage insurance protects the lender, and HOA dues usually go to the association. Only principal and interest are fixed for the life of a fixed-rate loan.
- Extra Principal Payments: How Much Interest and Time You SaveOn a 300,000, 30-year loan at 6.75%, adding 100 a month to principal saves about 65,000 in interest and ends the loan 49 months early. Savings rise with every extra amount, but each additional unit buys fewer months than the one before.
- Flat Rate vs Reducing Balance Interest: Converting a Loan QuoteA flat rate charges interest on the original amount for the whole term, even as you repay it. A 10% flat rate over five years costs the same as about 17.27% on a reducing balance, so convert any flat quote before comparing it with an ordinary loan rate.
- Rent vs Buy Break-Even: What Moves the Year Buying Pulls AheadThe break-even year is the first year-end when the buyer's equity plus savings exceeds the renter's invested savings. It is extremely sensitive to home-value growth, rent growth, the investment return and the financing rate; a change of one or two points in any of them can move it by years or remove it entirely.
- Compound vs Simple Interest: Worked Examples Over 30 YearsSimple interest pays the same amount every year on the original principal; compound interest pays on a growing balance. At 8%, the two match in year one, differ by 3,589.25 after 10 years and by 66,626.57 after 30 years on a 10,000 deposit.