Home › How Mortgage Amortization Works

How Mortgage Amortization Works

What amortization means

Amortization is how your mortgage gets paid down over time. Each monthly payment is split between interest (the cost of borrowing) and principal (what you owe).

The early years are mostly interest

Early on, your balance is high, so most of each payment goes to interest. Over time the balance shrinks and more of each payment goes to principal.

See your own schedule — switch between yearly and monthly views on our mortgage calculator.

How extra payments help

Any extra money toward principal reduces the balance faster, cutting both your total interest and your payoff time. Try our extra-payment field to see the difference.

Advertisement