Amortization Calculator
Estimate fixed-rate loan payments and view a monthly amortization schedule.
Inputs
Result
Enter values on the left and select Calculate to see the result here.
What the Amortization Calculator does
- Estimates the fixed monthly payment for a fixed-rate amortised loan based on the loan amount, annual interest rate, term, and payment schedule assumptions entered.
- Creates a month-by-month schedule showing each payment, the interest portion, the principal portion, and the remaining balance.
- Helps explain why early payments usually contain more interest, while later payments reduce the principal faster.
How to use the Amortization Calculator
- Select the currency for the displayed schedule.
- Enter the loan amount, which is the starting principal balance you want to repay.
- Enter the annual interest rate as a percentage. The calculator converts it to a monthly rate for the schedule.
- Enter the loan term in years. The calculator converts it into a monthly payment schedule by multiplying years by 12.
- Click Calculate to generate the monthly payment, total interest, total payment, and repayment table.
Formula / methodology used
- Monthly rate r = annual interest rate ÷ 12 ÷ 100. Number of payments n = loan term in years × 12.
- For interest-bearing loans, the fixed payment is M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan amount.
- For a 0% interest loan, the payment is P ÷ n and each scheduled interest amount is 0.
- For each month, interest = opening balance × monthly rate, principal repaid = payment − interest, and remaining balance = opening balance − principal repaid.
- The final row caps principal repayment at the remaining balance to avoid showing a negative balance. Displayed currency values are rounded to 2 decimal places.
Example calculation
A £18,000 loan at 6% annual interest over 4 years with monthly payments.
- Loan amount = £18,000
- Monthly rate = 6 ÷ 12 ÷ 100 = 0.005
- Number of payments = 4 × 12 = 48
- Using the fixed-payment formula, monthly payment ≈ £422.73
- First-month interest = £18,000 × 0.005 = £90.00, so first-month principal ≈ £422.73 − £90.00 = £332.73
- Total repayment ≈ £422.73 × 48 = £20,291.07, so total interest ≈ £2,291.07
Result: The calculator would estimate a £422.73 monthly payment. Month 1 would show about £90.00 interest, £332.73 principal, and a remaining balance of about £17,667.27.
Common mistakes and limitations
- This is an estimate based on your inputs and is not a lender statement, loan quote, or financial advice.
- It assumes a fixed annual rate, regular monthly payments, no missed payments, no extra repayments, no fees, and no variable-rate changes.
- It does not model lender fees, insurance, taxes, late charges, early repayment charges, daily interest, payment holidays, overpayments, or product changes unless you manually adjust assumptions outside the calculator.
- Rounding displayed row values to 2 decimals can create small differences from lender statements or from unrounded internal calculations.
- If your real loan uses daily interest, irregular payment dates, or changing rates, recalculate whenever assumptions change and compare with lender documents.
Important note
This amortization calculator is for general education and planning. It provides an estimate based on your inputs and is not financial advice, a loan quote, or a substitute for lender statements or professional guidance.
Amortization Calculator FAQs
What is amortization?
Amortization is the process of gradually repaying a loan through scheduled payments that cover interest and reduce principal.
What do loan amount, interest rate, term, and payment schedule mean?
Loan amount is the starting principal, interest rate is the annual percentage used to calculate monthly interest, term is how long repayment lasts, and the schedule shows each monthly payment split between interest and principal.
Why is the first payment more interest-heavy?
Interest is calculated on the outstanding balance. The balance is highest at the start, so early payments generally include more interest.
Can I model overpayments or variable rates?
Not in this version. The schedule assumes a fixed rate and regular monthly payments with no extra repayments.
When should I use the Mortgage Calculator instead?
Use the Mortgage Calculator when the loan is tied to a property purchase and you want deposit and optional ownership-cost inputs.