See exactly how each payment splits into principal and interest, and how extra payments shorten your loan
Enter the loan amount, interest rate, term and any extra monthly payment. You'll see the standard monthly payment, total interest with and without extra payments, how much you save, and how much sooner the loan is paid off. The schedule below shows exactly how each payment splits between interest and principal.
■ Principal ■ Interest
| Month | Payment | Principal | Interest | Balance |
|---|
Amortization is the process of paying off a loan through regular, equal payments over a fixed term. Each payment has two parts: principal (the amount that reduces your loan balance) and interest (the cost of borrowing). Early in the loan, most of your payment goes toward interest; later, most goes toward principal.
Monthly payments follow M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of payments (term × 12). Each payment covers the month's interest first; the remainder reduces principal, so the interest portion shrinks over time.
For a $300,000 loan at 6.5% over 30 years, the monthly payment is $1,896 and total interest over the life of the loan is $382,633. Because interest is front-loaded, early payments go mostly to interest — after 15 years you'll still owe more than half the original balance.
Generally yes, if you have no high-interest debt and a full emergency fund. Extra payments reduce principal directly, cutting both interest and loan term. However, if your mortgage rate is very low (under 4%), investing the extra money may earn more than the interest you'd save.
A 15-year mortgage has a higher monthly payment but saves hundreds of thousands in interest. On a $300,000 loan at 6.5%, you'd pay about $173,000 in interest over 15 years versus $382,000 over 30 years. Choose based on your budget and other financial goals.
"Good" depends on your goals. The standard is 30 years for mortgages. If you can afford the higher payment, a 15-year term builds equity faster and saves significantly on interest. Longer terms mean lower payments but more total interest.