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Standard amortization — the same formula lenders use.
The formula lenders actually use
Standard loans use equal monthly instalments: you pay a fixed amount every month, split between interest and principal. Early on, most of the payment is interest; as the balance falls the principal share grows. The amortization table shows that shift month by month.
Why total paid is so much more than the loan
Interest accrues on the outstanding balance, and over a long term it compounds into a very large number. On a 30-year mortgage the interest can approach or exceed the amount borrowed. Look at the total interest figure, not just the monthly payment.
A shorter term costs far less
Repaying the same amount over a shorter term raises the monthly payment but cuts total interest dramatically. Change the term a few times and watch the total interest move — the difference between 30 and 20 years is usually startling.
What this calculation leaves out
Origination fees, mortgage insurance, property taxes, escrow and late penalties are not included. These vary by lender and push the real cost higher. Use this to compare options, then get the lender's disclosure for the final number.
Frequently asked questions
Does this match what my bank quotes?
The formula is the standard amortization formula lenders use. Small differences usually come from rounding, or from fees and insurance the lender bundles separately.
Should I enter the annual or monthly rate?
Annual. The conversion to a monthly rate happens inside the calculation.
What is the amortization schedule for?
It shows how much of each payment goes to interest versus principal, and what the balance is at any month. It is the right reference when weighing up early repayment.
Can I use it for a zero-interest loan?
Yes, set the rate to 0 and it divides the principal evenly across the term.