Mortgage Amortization Explained
Category: Calculation Basics
Amortization is the process of paying off a debt with a known repayment schedule in regular installments over time.
How Amortization Works
An amortization schedule is a table detailing each periodic payment on an amortizing loan. It shows:
- The total payment amount
- How much of the payment goes toward interest
- How much goes toward principal
- The remaining loan balance after the payment
Because interest is calculated on the remaining balance, the interest portion of your payment decreases each month while the principal portion increases, even though the total principal-and-interest payment stays the same.
See It In Action
Use the Mortgage Calculator to generate a full month-by-month amortization schedule for your specific loan scenario, or browse the Amortization Tables for standard reference cases.