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Mortgage amortization schedule with extra payments
Short answer: Learn how a mortgage amortization schedule splits principal and interest and how extra payments change the remaining balance and payoff date.
An amortization schedule lists every planned payment. Each row shows the opening balance, interest for that period, principal repaid, any extra principal and the remaining balance. It is the clearest way to understand why a loan with the same monthly payment can have a very different interest cost when its term or rate changes.
For a fixed-rate repayment mortgage, interest is calculated from the balance at the start of a payment period. Early in the term, that balance is larger, so more of each scheduled payment goes to interest. As principal falls, the interest portion generally falls and the principal portion rises. The final payment is adjusted so the balance does not become negative.
An interest-only schedule is different. Each scheduled payment is interest only, the principal stays due at the end of the term, and extra principal is the only way the modelled balance falls. Confirm the product type with the lender before treating either schedule as a quote.
Use the calculator schedule as an illustrative cash-flow model. Actual lender schedules can differ because of daily interest, payment dates, escrow, product fees, rate changes or contractual rounding.
Worked example: a $320,000 loan at 6.5% for 30 years
- Loan principal: $320,000.
- Nominal annual rate: 6.5%, divided into 12 monthly periods.
- Term: 360 scheduled monthly payments.
- Calculated principal-and-interest payment: approximately $2,022.62 per month.
Interpretation: In month one, approximately $1,733.33 is interest and $289.29 reduces principal. The example excludes property tax, insurance, HOA charges, lender fees and rounding differences used by an actual lender.
Interest-only compared with repayment
On a repayment loan the schedule reduces the balance each period. On an interest-only loan the scheduled payment leaves the principal due at term end. Open the UK interest-only mortgage calculator when that is the product you are illustrating, then return to the amortization calculator for a full repayment table.
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