How well do you understand your mortgage loan? If you’re like most people, you pay your mortgage loan monthly and give it no extra thought. But you’re doing yourself a disservice. By gaining a deeper understanding of your loan, you can make smarter loan decisions and even save money. 

That’s where an amortization calculator comes in. This visualization tool shows how each loan payment breaks down over time. It helps you understand your loan balance, home equity, and other essential information about your loan. It can also help you learn how making a few extra payments can reduce the total cost of your loan.

What Is an Amortization Calculator?

Mortgage amortization is the process through which borrowers pay their loan over time, using fixed payments on a regular schedule. Although each loan payment is the same amount, the way it’s divided between interest and principal changes over time. Amortized loans make budgeting simple. Payments are consistent and reliable. 

Non-amortized loans, also known as interest-only or balloon loans, are a type of non-QM loan. These loans aren’t paid in regular payments on a regular schedule. For the duration of the loan, borrowers are only responsible for paying the loan interest. Once the loan has reached maturity, the principal balance must be paid off in full, typically in a single payment.

How Does a Loan Amortization Calculator Work? 

An amortization calculator helps borrowers visualize how their mortgage loan debt will reduce over time. This tool shows a payment-by-payment breakdown of each future loan repayment. It shows the portion of each loan payment that will go towards interest, as well as the portion that will go towards the principal. 

Borrowers will find that, at the beginning of the loan, a larger portion of each mortgage payment goes towards interest. Over time, that portion gets smaller, and the portion that goes towards the principal balance gets larger. Here’s why that happens: your monthly loan interest is calculated using the following formula: 

Interest = ( APR / 12 ) x Principal balance 

For example, the first interest payment for a $100,000 loan with an APR of 6% will be calculated as follows: 

Interest = ( 0.06 / 12 ) x 100,000 

For this payment, your interest will be $500. If your total monthly loan payment is $1,000, your first loan payment will pay $500 of interest and $500 of your principal. 

As your principal balance gets smaller, the interest you pay on that principal gets smaller, too. By the time you’ve paid off half your principal balance, your interest will be calculated as follows: 

Interest = ( 0.06 / 12 ) x 50,000 

At this point, your interest payment will be just $250. That means your $1,000 monthly loan payment will pay $250 in interest and $750 towards your principal balance. 

Using a loan amortization schedule generator online, you won’t need to manually calculate your monthly loan payments with interest. You can simply see a table of all future loan payments and how they’ll change over time.

Loan Amount
Loan Term
Interest Rate
Loan Start Date
Advanced
Optional: Make extra payments
By adding extra payments, you can pay off your loan and save on interest.
Additional Amount to Monthly Payment
Additional Yearly Payments Starting
One-time Additional Payment on

Payment Over Time

Loan Amount
$XX,XXX
Total Interest Paid
$XX,XXX
Total Cost of Loan
$XX,XXX
Payoff Date
XX,XXX

Amortization Balance Over Time

Loan Amount
$XX,XXX
Total Interest Paid
$XX,XXX
Total Cost of Loan
$XX,XXX
Payoff Date
XX,XXX
Interest Paid
$X,XXX
Principal Paid
$X,XXX
Loan Balance
$X,XXX

Amortization Schedule Breakdown

First Payment
Last Payment
XX,XXX
Expand/Hide all years
Date Principal Interest Balance
Empty
Export as CSV | Printer-friendly version

Payment breakdown

Loan Amount
$XX,XXX
Total Interest Paid
$XX,XXX
Total Cost of Loan
$XX,XXX
Payoff Date
XX,XXX
$X,XXX
Per Month
Interest
$X,XXX.XX
Principal
$X,XXX.XX

What Is an Amortization Schedule? 

An amortization schedule is a table that maps out the lifetime of your loan. You’ll see each loan payment, how it breaks down between interest and principal, as well as your remaining loan balance after it’s paid. Rather than creating a loan amortization table in Excel, use our loan payment schedule generator. It will create a loan amortization schedule for you. 

Benefits of Using an Amortization Schedule Calculator

A loan amortization schedule mortgage calculator helps you stay on top of your finances. Its benefits include: 

  • Understand total interest cost: With an amortization schedule calculator, you can more clearly understand the cost of your total interest on your loan and how it changes over time. You’ll learn that, at the beginning of your loan, you pay mostly interest each month. As time goes on, you’ll pay more and more of your principal balance. An amortization schedule helps you visualize the true, total cost of your loan. 
  • See payoff timeline: You’ll gain a deeper understanding of how far you are in paying off your principal balance and have a clear timeline for its repayment. 
  • Plan refinancing: Thinking about refinancing your loan? An amortization schedule can help. In order to refinance, you’ll need substantial equity in your home. Your schedule will show you the point at which you’ll have enough equity to refinance. Look at your current amortization schedule and proposed amortization schedule after a refinance to see how refinancing will change your financial situation. 
  • Evaluate extra payments: Making extra loan payments is an excellent way to shorten your loan terms and lower your total interest. An amortization schedule can help you visualize this. 
  • Compare loan options: Before securing a loan, compare amortization schedules from different loan terms and pick the best option for your needs. For instance, you can see the difference in a 15-year and 30-year mortgage amortization at a 6.5% interest rate.  
  • Budget more effectively: Having a consistent monthly payment enables you to budget more effectively. An amortization schedule calculator can help you visualize this. 

How Making Extra Payments Can Impact Your Loan 

Did you know that making extra payments can dramatically decrease the total cost of your loan? This is because your monthly interest payments are calculated based on your loan’s principal balance. If your loan principal is smaller, your monthly interest payments are smaller. By simply including an extra principal payment whenever you’re able, you’ll pay less total interest over the lifetime of your loan. You’ll pay your loan off more quickly, too. 

Use our mortgage payoff calculator to see this in action. It includes an extra payment mortgage calculator so you can see how extra payments affect your loan. We also offer a bi-weekly mortgage calculator to help you envision other ways to pay off your loan. 

Instead of including an extra payment here and there, you can also make a lump-sum mortgage payment. Maybe you fell into some money from a substantial work bonus or an inheritance. You can put that money towards your loan in a one-time payment and have the same dramatic impact on your total interest. 

Try Our Free Amortization Calculator 

A smiling woman looking at her laptop and using a calculator. Gain a deeper understanding of your mortgage loan with our free amortization calculator. Get a clear view of how you’ll pay off your loan over time and where each loan payment is going. You can improve your budgeting, plan refinancing, and learn how to reduce the total cost of your loan through early payments. 

For greater financial literacy, get the Griffin Gold app. If you haven’t yet purchased a home, check out the home affordability calculator. Homeowners, on the other hand, can get access to equity and net worth tracking, property value insights, and refinancing tools. 

Find the best loan for you. Reach out today!

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Frequently Asked Questions

What is amortization in simple terms?

In simple terms, amortization is a loan setup that enables you to pay off a loan in small, fixed payments over time. While each loan payment is for the same amount, the way the payment is divided changes. At the beginning of your loan, a higher percentage of each payment will go towards interest. As you pay off the loan, a higher percentage will go towards the principal loan balance.

When should I use a mortgage amortization calculator?

There are plenty of scenarios in which a mortgage amortization calculator can be helpful: 
  • Before you secure your loan, use a mortgage amortization calculator to understand the difference between a 15-year and 30-year mortgage, or different interest rates. You can determine whether current interest rates are affordable, or whether you should wait for interest rates to fall. 
  • Use a mortgage amortization calculator to determine the point at which you have enough equity to refinance your loan. 
  • See how making extra payments would change your financial situation with a mortgage amortization calculator.

How do I calculate loan amortization?

You can make your own loan amortization schedule in a spreadsheet, but it’s much easier to use our loan amortization calculator. It will do the hard work for you. Just put in your loan amount, term, and interest rate, and we’ll show you your monthly payment, total interest paid, and total loan cost. You’ll get a year-by-year breakdown of each number.

Why is most interest paid at the beginning of the loan?

Loan interest is calculated using your remaining loan balance. At the beginning of your loan, your remaining loan balance is very high, so your interest payments are much higher. As your loan principal gets smaller, your interest payments will get smaller, too.

Can I pay off my mortgage early?

Yes, you can pay off your mortgage early, but check with your lender first. Some mortgage lenders charge penalties for early loan repayment. It’s important to get a clear picture before paying off your loan.

Bill Lyons is the Founder, CEO & President of Griffin Funding. Founded in 2013, Griffin Funding is a national boutique mortgage lender focusing on delivering 5-star service to its clients. Mr. Lyons has 25 years of experience in the mortgage business. Lyons is seen as an industry leader and expert in real estate finance. Lyons has been featured in Forbes, Inc., Wall Street Journal, HousingWire, and more. As a member of the Mortgage Bankers Association, Lyons is able to keep up with important changes in the industry to deliver the most value to Griffin's clients. Under Lyons' leadership, Griffin Funding has made the Inc. 5000 fastest-growing companies list five times in its 12 years in business.