1. What is a Mortgage Payment Schedule?

Definition: This calculator shows the breakdown of each monthly mortgage payment into interest and principal components, along with the remaining balance.

Purpose: It helps borrowers understand how their payments are applied and how the loan balance decreases over time.

2. How Does the Calculator Work?

The calculator uses these formulas for each month:

Where:

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

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 schedule helps with financial planning, shows the true cost of borrowing, and illustrates how extra payments can reduce total interest.

4. Using the Calculator

Tips: Enter the loan amount, monthly interest rate (annual rate ÷ 12), fixed monthly payment, and number of months to display. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Why does early payment go mostly to interest?
A: Interest is calculated on the outstanding balance, which is highest at the beginning of the loan term.

Q2: How do I find my monthly interest rate?
A: Divide your annual rate by 12 (e.g., 6% annual = 0.06 ÷ 12 = 0.005 monthly).

Q3: What if my payment doesn't cover the interest?
A: The calculator will show negative principal, indicating your balance would increase (negative amortization).

Q4: How does extra payment affect the schedule?
A: Recalculate with higher payment to see reduced interest and faster payoff.

Q5: Why does my final payment differ?
A: The calculator adjusts the final payment to exactly clear the remaining balance.