#amortizationcalculator

The amortization schedule for a mortgage loan is nothing but a table that provides the breakdown of monthly loan repayment installments from the loan’s first payment to its final one. The amount of each installment of a mortgage is divided into two parts. One part is used to pay off the principal balance of the loan (the debt that is owed by you), whereas the other part pays off the interest portion (the cost of borrowing). An amortization schedule is a table of periodic loan payments that depicts the parts of installment amounts covering both the portions separately.

While the overall amount of the installment remains same each month (especially under fixed rate mortgage), the portion covering interest and principal keeps on changing. You can use an amortization calculator to see the amount you’re paying towards principal and interest.

In the initial years of a mortgage loan, the majority portion of the installment amount covers the interest portion, whereas a very insignificant portion of the installment covers the principal. Therefore, for the first 5-6 years of the loan, the principal balance is hardly paid off. With time, this status quo shifts in the favor of principal payments and later on in the loan cycle the majority amount of an installment covers the balance of the loan.