Amortization Calculator

Amortization is a fancy financial term for a simple concept: the process of paying off a debt over time through regular payments. However, the mechanics of how those payments are split between principal (the money you borrowed) and interest (the cost of borrowing) can be complex. Our Amortization Calculator peels back the layers, generating a detailed month-by-month schedule that shows exactly where your money is going.

To use the tool, enter your loan amount, interest rate, and loan term. The calculator instantly generates a table—an amortization schedule. For each payment, you will see the beginning balance, the amount paid to interest, the amount paid to principal, and the ending balance.

The most eye-opening aspect of amortization is the 'front-loading' of interest. In the early years of a long-term loan like a mortgage, almost all of your payment goes to the bank as profit (interest). Very little goes towards reducing your debt. For example, on a new 30-year mortgage, your first payment might be 80% interest and only 20% principal. It can take 15-20 years before you start paying more principal than interest each month.

This tool allows you to see the impact of extra payments. By adding even a small amount to your monthly payment, you attack the principal directly. This reduces the balance on which future interest is calculated, creating a compounding saving effect. Our calculator lets you input extra payments to see how many years and thousands of dollars you can save.

It is also useful for tax purposes. In the US, mortgage interest is often tax-deductible. You can use the annual totals in the schedule to estimate your tax deduction for the coming year.

For those considering refinancing, the amortization schedule is a critical decision-making tool. Restarting a 30-year loan resets the amortization clock, meaning you go back to paying mostly interest. Sometimes, keeping your existing loan with a higher rate but fewer years left is cheaper than refinancing to a lower rate but extending the term.

Business owners can use this to track loans for equipment or real estate, ensuring their accounting matches the bank's records.

Understanding your amortization schedule empowers you to take control of your debt. Instead of blindly making payments, you can strategize to minimize interest costs and become debt-free sooner.

Key Benefits:

• Generate detailed month-by-month amortization schedules
• Visualize the split between Principal and Interest
• See the impact of extra payments on loan term
• Calculate total interest savings from prepayments
• Estimate annual interest for tax deductions
• Evaluate the true cost of refinancing
• Track loan balances over time
• Exportable data for personal finance tracking