Amortization is the process of paying off a loan with regular, equal payments over time. Each payment covers the interest due that month, and the rest reduces the principal — so a fixed-rate mortgage is fully paid off by the end of its term.
Interest is charged on the remaining balance, which is largest at the beginning. On a 30-year loan at 6%, the very first payment is about 83% interest. As the balance falls, more of each payment goes to principal — the crossover to "mostly principal" happens surprisingly late, often past the halfway point in years.
An amortization schedule lists every payment and its split between principal and interest, along with the balance that remains. It is the clearest way to see the true cost of a loan and why extra principal payments early on save so much interest.
Enter a loan below and expand the full amortization schedule under the chart:
The CFPB and Freddie Mac offer unbiased guides to mortgages and amortization. Figures here are estimates for education, not financial advice.