The concept
How amortization changes a balance
Amortization divides repayment across scheduled periods. Interest is calculated on the remaining balance, so the interest portion generally declines over time.
Extra payments can shorten the modelled term, but actual loan contracts may apply prepayment rules or fees not represented here.
The method
How the calculation works
The calculator determines the scheduled payment, adds the optional extra amount, then iterates month by month until the balance reaches zero or the original term ends.
The standard scheduled payment is calculated first; the entered extra amount is then applied to principal each month.
Worked example
A neutral example
A $320,000 balance at 6% for 30 years produces a scheduled payment before taxes, insurance or fees. Adding a recurring extra payment reduces the modelled payoff time and interest.
This example explains the method. It does not recommend a financial action or predict an outcome.
Frequently asked
Amortization Calculator questions
Does this create a full monthly table?+
This first version summarizes payment, interest and payoff months.
Are extra payments always allowed?+
Not necessarily. Check the actual contract for restrictions or fees.
What happens at a zero rate?+
The principal is divided evenly across the term.