1. What is a Mortgage Loan Payment Schedule?

Definition: This calculator shows the detailed breakdown of each payment throughout the life of a mortgage loan.

Purpose: It helps borrowers understand how much of each payment goes toward principal vs. interest and how the loan balance decreases over time.

2. How Does the Calculator Work?

The calculator uses the following formulas for each payment period:

Where:

• \( I_k \) — Interest portion of payment k
• \( P_k \) — Principal portion of payment k
• \( B_k \) — Remaining balance after payment k
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( M \) — Fixed monthly payment amount

Explanation: Each payment first covers the interest due on the remaining balance, with the remainder applied to reduce the principal.

3. Importance of Payment Schedule

Details: Understanding the payment schedule helps borrowers see the true cost of borrowing and how extra payments can reduce total interest paid.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. The calculator will show the monthly payment and full amortization schedule.

5. Frequently Asked Questions (FAQ)

Q1: Why does most of my early payment go toward interest?
A: This is normal with amortizing loans. Since interest is calculated on the current balance, more interest is due when the balance is highest.

Q2: How can I pay less interest overall?
A: Make extra principal payments, choose a shorter loan term, or refinance at a lower rate when possible.

Q3: What happens if I make an extra payment?
A: Extra payments reduce the principal faster, which reduces future interest and may shorten the loan term.

Q4: Is the monthly payment always the same?
A: For fixed-rate mortgages, yes. For adjustable-rate mortgages (ARMs), the payment changes when the rate adjusts.

Q5: How is the monthly payment calculated?
A: Using the formula: \( M = P \times \frac{r(1+r)^n}{(1+r)^n-1} \) where P is loan amount, r is monthly rate, and n is number of payments.