How to use this amortization calculator
- Enter your loan amount. In the Loan amount field, input the amount of money you’re borrowing for your mortgage.
- Enter your loan term. In the Loan term field, input the length of your loan. This might be 30 years, 15 years or another time frame.
- Enter your interest rate. In the Interest rate field, input the interest rate you’re paying on your mortgage.
- Enter your loan start date. In the Loan start date field, input the month when you made your first payment.
After you’ve input this information, you can see how your payments will change over the length of the loan.
Additionally, this calculator can help you:
- Determine how much principal you owe now or will owe at a future date.
- Determine how much extra you'd need to pay every month to repay the full mortgage in a shorter time frame.
- Determine how much equity you have in your home.
- See how much interest you’ve paid over the life of the mortgage, or during a particular year (though this might vary based on when the lender receives your payment).
What is amortization?
Amortization is a term that comes from the Latin word for “to die.” It's typically used in two areas of finance: as an accounting term for spreading a cost over a period of time; and in lending to refer to the process of paying back a loan over a period of time.
With mortgage amortization, a portion of your monthly payment goes toward the principal, or the amount you borrowed, and another portion goes to interest.
For the amortization on a fixed-rate mortgage, you'll repay the loan in equal installments, with interest making up a larger piece of the payment than principal at first. These installments are outlined in the amortization schedule.
Say you take out a $300,000 30-year mortgage with a 6 percent interest rate. Excluding any additional fees and costs, your monthly payment would be $1,799 for the duration of the loan. However, your first payment would consist of $1,500 paid to interest and the remaining $299 paid to principal. Your second payment would consist of $1,498.51 paid to interest — a slight reduction from the first payment. Over time, you'll etch away at the principal, paying less towards interest and more towards principal with each payment until the loan is paid off.
What is an amortization schedule?
An amortization schedule is a table that lists each monthly payment from the time you start repaying the loan until the loan matures, or is paid off. The amortization schedule details how much will go toward each component of your mortgage payment — principal or interest — at various times throughout the loan term.
Next steps
If you want to accelerate the mortgage payoff process, you can pay additional money to the principal at any time. You might decide to do this on a biweekly basis, with your monthly payment, once a year or whenever you have extra funds.
Another option is mortgage recasting, a process that reamortizes your existing loan. With a recast, you'll pay a lump sum towards the principal, plus a fee of a few hundred dollars. Your loan term and interest rate will remain the same, but your monthly payment will be lower.
