1. What is a Mortgage Loan Amortisation Calculator?

Definition: This calculator shows how each mortgage payment is split between principal and interest over the life of the loan.

Purpose: It helps borrowers understand how their payments are applied and how much interest they'll pay over time.

2. How Does the Calculator Work?

The calculator uses these amortization formulas:

Where:

• \( I_k \) — Interest portion of payment k (USD)
• \( P_k \) — Principal portion of payment k (USD)
• \( B_k \) — Remaining balance after payment k (USD)
• \( r \) — Monthly interest rate (decimal)
• \( M \) — Fixed monthly payment (USD)

Explanation: Each payment first covers the interest due on the outstanding balance, with the remainder going toward principal reduction.

3. Importance of Amortisation

Details: Understanding amortization helps borrowers see how much of their payment builds equity versus paying interest, and how extra payments can shorten the loan term.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. The calculator will show your monthly payment and how it's split between principal and interest.

5. Frequently Asked Questions (FAQ)

Q1: Why does the interest/principal split change over time?
A: As you pay down principal, the interest is calculated on a smaller balance, so more of each payment goes toward principal.

Q2: How can I pay less interest overall?
A: Make extra principal payments or choose a shorter loan term to reduce total interest paid.

Q3: What's the difference between interest rate and APR?
A: APR includes both interest rate and loan fees, giving a more complete cost picture.

Q4: How does a larger down payment affect amortization?
A: A larger down payment reduces the loan amount, resulting in lower payments and less total interest.

Q5: Can I see the full amortization schedule?
A: This calculator shows the monthly payment breakdown. For a full schedule, use our detailed amortization calculator.