Mortgage Amortization Calculator

When you take out a mortgage, your monthly payments are split between paying off the loan principal (the amount you borrowed) and interest (the cost of borrowing the money). In the early years of your mortgage, the majority of your payments go towards interest, while only a small portion reduces the principal. This is because the interest is calculated on the remaining balance of your loan, which is highest at the beginning.

As time goes on and your principal is gradually reduced, the amount of interest you pay decreases, while more of your payment goes towards repaying the principal. This means that in the later years of your mortgage, you’ll see your balance decrease faster, and you’ll pay much less in interest.

With this calculator, you can see how this shift happens over the entire term of your loan. The fixed-rate period shows consistent payments at the agreed interest rate, and when this period ends, the calculator adjusts your payments according to the new follow-on rate. Over time, you’ll notice the increasing impact of your payments on reducing the outstanding loan balance as less interest is charged.

This is why the early years of a mortgage tend to cost more in interest, but as you repay more of the principal, the interest drops, helping you pay off the loan more quickly.