Amortization Schedule Calculator

Because interest is charged on what is still outstanding, and at the start almost everything is outstanding. On a 250,000 loan at 6.5 percent the first payment puts about 226 against the balance and about 1,354 toward interest. Nothing is being hidden and no fee is being taken: the split shifts month by month as the balance falls, and by the final year almost the whole payment is principal.

Far more than the extra itself, on a long loan. Every additional amount reduces the balance that every later month's interest is charged on, so the saving compounds. On 200,000 at 6 percent over 30 years, 200 a month extra clears the loan nine years early and saves close to 80,000 in interest for about 50,000 paid in. Paying extra early is worth considerably more than paying the same amount later.

No, it shortens the term. The instalment is fixed by the original agreement, and extra amounts are credited against principal, so the loan finishes sooner rather than getting cheaper each month. Reducing the payment instead is called recasting, and most lenders will only do it on request and often charge for it. This calculator shortens the term, which is what actually happens by default.

Half the monthly payment every fortnight. Twenty-six half payments a year come to thirteen monthly ones rather than twelve, so it is really one extra payment a year with the extra spread across it. That is where the saving comes from, and it is worth knowing, because paying the same extra amount yourself achieves exactly the same thing without the fee some services charge to set it up.

Because rounding each payment to the cent leaves a few cents outstanding or overpaid by the end of a long term. The last payment is whatever clears the balance exactly. A schedule that finishes on a balance of minus three cents is one nobody trusts, and a real lender adjusts the final instalment for the same reason.