Amortization is the process of paying off a loan through regular fixed payments over time. Each payment covers two things: the interest charged on the outstanding balance, and a portion of the principal (the actual amount you borrowed). The split changes with every payment — early payments are mostly interest; late payments are mostly principal. By the final payment, the balance reaches exactly zero.
Understanding this split matters because it reveals the true cost of a mortgage. On a typical 30-year loan, you might pay nearly as much in interest as you borrowed in the first place. The payoff schedule makes that visible.
The fixed monthly payment is calculated from three inputs: the principal (P), the monthly interest rate (r = annual rate ÷ 12), and the number of payments (n = years × 12).
The formula is: payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
This gives a payment amount that stays constant for the life of the loan while gradually shifting the balance between interest and principal with each payment. The calculator applies this formula and then builds the full schedule month by month.
For each month:
In the first month of a €300,000 mortgage at 4% for 30 years, the interest portion is about €1,000 and the principal portion is about €430. In the final month, the interest is a few euros and the principal clears the remaining balance.
When you make an extra payment — say, €200 extra per month — that amount goes directly to principal. This reduces the balance faster, which means less interest accumulates the next month. The effect compounds: each reduced-interest month allows the next month's payment to pay off even more principal. The result is a shorter loan term and significantly lower total interest paid.
The calculator shows the impact of overpayments directly: enter a monthly extra payment and the schedule updates to show the new payoff date and the total interest saving. A €200/month overpayment on a typical 30-year mortgage can save 4–6 years and tens of thousands in interest.
The table shows one row per payment: the payment number, the date, the payment amount, the interest portion, the principal portion, and the remaining balance. You can use it to answer specific questions: "what is my balance in year 5?", "how much interest will I have paid by the time I sell in year 8?", "what happens if I make a lump-sum payment this month?"
This calculator computes pure amortization: principal and interest only. It doesn't include property taxes, homeowner's insurance, or PMI (private mortgage insurance) — the additional costs that make up the full monthly outgoing on a mortgage. Those vary by location and lender and are best confirmed with your mortgage provider. The numbers here are for planning and comparison, not for binding financial decisions.