Amortisation schedule calculator
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An amortisation schedule is the loan written out: every payment split into interest and principal, with the balance falling to zero. It is also the most persuasive argument for prepaying that exists, because it makes visible how little of an early instalment actually reduces what you owe.
The formula
Each month: interest = balance × monthly rate, principal = instalment − interest, and the balance falls by the principal. Repeat until the balance is zero; the last payment is whatever clears it.
A worked example
A $250,000 loan at 8.75% over 20 years:
| Monthly instalment | $2,209 |
|---|---|
| Total interest | $280,225 |
| Total repaid | $530,225 |
| Interest vs loan | 112% |
| Interest in month 1 | $1,823 |
| Interest in the final month | $16 |
What to watch
- The principal column must sum to exactly the amount borrowed. If a calculator's schedule does not, its totals are decoration.
- Interest falls monotonically and principal rises, every single month, with no exceptions — a schedule that wobbles has a rounding error in it.
- The crossover point, where principal first exceeds interest, is past the halfway mark on most long loans. On a twenty-year loan at 8.75% it lands in year 13 — about 61% of the way through.
- Reading the schedule is the quickest way to see why the first years are the ones worth attacking.
The trap
Assuming the halfway point in time is the halfway point in principal. On a long loan you will have repaid far less than half the balance when half the term has passed.
Questions
What is an amortisation schedule?
A row per payment showing how much goes to interest, how much to principal, and what is left owing. On our $250,000 example the first month's interest alone is $1,823, against an instalment of $2,209.
Why is so much of my early payment interest?
Because interest is charged on the outstanding balance, and at the start the balance is the whole loan. As it falls, so does the interest portion — slowly at first, then quickly.
When do I start paying more principal than interest?
Later than most people expect. On a twenty-year loan at 8.75% the crossover is in year 13, about 61% of the way through; on a thirty-year loan it is year 23, roughly three quarters of the way.
Rate bands and lending rules on this page were last reviewed on 2026-10-23 and are indicative, not offers. The arithmetic is produced by the same code the calculator runs. Confirm the terms with your own lender before committing; nothing here is financial advice.