Loan Amortization Calculator

Why are my early loan payments mostly interest?

A fully amortizing loan has a fixed payment that never changes, but the split between interest and principal shifts every single period. In period one, interest is calculated on the full loan balance — so on a $300,000 loan at 7%, the first month's interest alone is $1,750. Only the remainder of your payment reduces principal.

As the balance falls, less of each payment goes to interest and more retires principal.

This is why a 30-year mortgage feels like it takes decades to build equity. In the first five years of a $300,000 loan at 7%, you pay $119,754.60 in total payments but reduce your balance by only $17,605.41 — the rest is interest. The schedule makes this visible: look at the "principal paid" column in year 1 versus year 20.

How do extra payments shorten an amortization schedule?

Any amount you pay above the scheduled principal immediately reduces the outstanding balance. Because next month's interest is calculated on that lower balance, a smaller slice of next month's payment goes to interest — and slightly more goes to principal. That compounding effect means every early extra dollar saves more interest than a late extra dollar of the same size.

A one-time $200 extra payment in month 1 of a $300,000, 30-year loan at 7% saves $1,413.88 in total interest — about seven times its size — although on its own it only shrinks the final payment. The same $200 paid in month 300 saves $83.52. Paid every month, $200 extra saves $116,638.85 and 85 payments. Open the extra-payment panel, enter $200 in the monthly extra field, and watch the payoff date and total interest lines update immediately.

Do bi-weekly payments really save money?

Bi-weekly payment plans are often sold as a compounding trick. They are not. The saving comes entirely from making 26 half-payments per year — which equals 13 full payments instead of 12. That one extra payment per year is real: on a $300,000, 30-year loan at 7% it removes 75 payments and saves $102,425.

To model it here, keep the frequency on monthly and enter your payment ÷ 12 ($166.33 in that example) as the monthly extra.

The calculator's Bi-weekly frequency is something different: a loan written with 26 payments a year, its payment re-solved for 780 periods ($920.76 on the same loan, a little less than half the monthly $1,995.91). It makes no 13th payment, so its total interest ($418,204.63) is almost the same as the monthly schedule's.

The catch is servicer behaviour. Many servicers hold each mid-month half-payment in a suspense account until the second half arrives, then post both as one monthly payment on the due date. In that case, your balance does not fall mid-month and you get none of the intra-period interest reduction — only the benefit of one extra annual payment. Always confirm in writing that your servicer credits each half-payment on receipt before relying on the full bi-weekly savings shown.

How does payment frequency change the schedule?

Changing frequency does not change the formula — it changes the periodic rate (annual rate / periods per year) and the total number of periods. Monthly uses 12 periods; bi-weekly uses 26; weekly uses 52; quarterly uses 4; annual uses 1. The payment amount differs because it covers a different share of interest per period.

Weekly payments are not 4x a bi-weekly payment. They are calculated independently as P x [r_w(1+r_w)^N] / [(1+r_w)^N - 1] where r_w = annual rate / 52 and N = term in years x 52. This calculator uses the exact formula for each frequency and does not scale one frequency from another.

Why is the last payment different from the others?

Each payment is rounded to the nearest cent using standard half-up rounding. Interest for each period is then computed on the exact (unrounded) remaining balance, not on a rounded figure. This matches how lenders calculate and means the schedule recreates your actual statement.

The final payment almost always differs slightly from all other payments — it absorbs the accumulated rounding residual and clears the balance to exactly zero.

A $300,000 loan at 7% for 30 years has 359 payments of $1,995.91 and a final payment of $1,992.84 (servicers can differ by a few cents depending on their rounding rules). The "last payment" line in the schedule shows the actual final amount. This calculator always states this convention beside the result, as required by the site's disclosure standard.