What is an amortization schedule?
An amortized loan is paid off with equal monthly payments. Each payment first covers the interest for that month, and the rest reduces the balance (the principal). Because the balance is largest at the start, early payments are mostly interest. Later, as the balance shrinks, more of each payment goes to principal.
For example, a $300,000 mortgage at 6.5% for 30 years has a payment of about $1,896. In the first year, roughly $19,400 goes to interest and only about $3,350 to principal. Over the full 30 years you would pay about $382,600 in interest.
How to use the schedule
- See your balance at any year – useful when planning to sell or refinance.
- Test extra payments – adding even $100 or $200 a month cuts the payoff time and total interest.
- Compare terms – a 15-year loan has a higher payment but builds equity much faster.
Frequently asked questions
Why does so little of my payment go to principal at first?
Interest is charged on the remaining balance, which is highest at the start. As you pay the balance down, the interest part shrinks and the principal part grows.
Does the schedule include taxes and insurance?
No. It shows principal and interest only. Mortgage payments often also include property tax, homeowners insurance and mortgage insurance held in escrow.
Which loans are amortized?
Most mortgages, auto loans, student loans and personal loans. Credit cards and interest-only loans are not.