Calculate your loan payment schedule with detailed breakdowns of principal and interest payments over time.
| Payment # | Date | Payment | Principal | Interest | Extra Payment | Balance |
|---|
Amortization is the process of spreading out a loan into a series of fixed payments over time. Each payment covers both interest costs and principal repayment, with the interest portion decreasing and the principal portion increasing over the life of the loan.
1. Principal: The original amount of money borrowed
2. Interest: The cost of borrowing money, calculated as a percentage of the principal
3. Term: The length of time over which the loan will be repaid
4. Amortization Schedule: A table detailing each periodic payment on a loan
5. Equity: The portion of the property value that you truly "own"
How amortization works:
Benefits of understanding your amortization schedule:
Making extra payments toward your principal can significantly reduce the total interest paid and shorten the loan term. Even small additional payments applied directly to principal can make a substantial difference over time.
The monthly payment for a fixed-rate loan is calculated using the formula:
M = P × [r(1+r)^n] / [(1+r)^n - 1]
Where:
• M = Monthly payment
• P = Principal loan amount
• r = Monthly interest rate
• n = Total number of payments
| Extra Payment | Time Saved | Interest Saved |
|---|---|---|
| $50/month | 2 years | $22,000 |
| $100/month | 4 years | $40,000 |
| $200/month | 7 years | $65,000 |
• Make bi-weekly payments instead of monthly
• Apply windfalls (tax refunds, bonuses) to principal
• Round up your payments
• Consider refinancing if rates drop significantly