Amortization schedule
Updated
What is amortization schedule?
An amortization schedule is the month-by-month table showing how each payment splits between interest and principal, and what balance remains after every payment.
How it is calculated
Interest this month = remaining balance × (annual rate ÷ 12); principal = payment − interest
Amortization schedule questions
- What is an amortization schedule?
- A month-by-month table of every payment on a loan, split into interest and principal, with the balance that remains after each one. It shows exactly when the loan is paid off and how much interest it cost to get there.
- What does an amortization schedule show?
- For each month: the payment, how much of it is interest, how much reduces the balance, and the balance left afterwards. Early payments are mostly interest; the mix shifts towards principal as the balance falls.
- Why is so little of my early payment going to principal?
- Interest is charged on the balance, and at the start the balance is at its largest. The payment is fixed, so the interest share is highest at the beginning and falls every month as the balance comes down.
What it means in practice
Interest each month is the remaining balance times the monthly rate, so early payments are interest-heavy and the principal share grows over time.
This front-loading is why refinancing into a new 30-year term resets you to the interest-heavy part of the curve, even at a lower rate.
It is also why extra principal is so effective early: every dollar of principal removes all the future interest that dollar would have generated.