Calculators
Loan calculator
The monthly figure on a 30-year loan hides how much of it is interest. The schedule below shows the crossover point where your payment finally starts reducing the balance faster than interest adds to it.
| Year | Principal | Total interest | Balance |
|---|
How to use it
- Enter the amount borrowed, the annual rate and the term in years.
- Read the monthly payment and total interest.
- The schedule shows principal and interest per year.
- Change the term to see how much interest a longer loan really costs.
Why the split between interest and principal shifts
Interest is charged on the outstanding balance each month. At the start the balance is at its largest, so most of your payment goes to interest and very little reduces the principal. As the balance falls, the interest share shrinks and the principal share grows. On a 30-year loan at 4.5%, the point where half the principal has been repaid is not year 15 — it is closer to year 22.
Equal payment versus equal principal
Equal payment keeps the monthly figure constant, which suits budgeting. Equal principal repays a fixed slice of the principal each month plus interest, so payments start higher and fall over time, and total interest is lower. Over 30 years the difference can reach a fifth of the sum borrowed, which is more than most people expect when they pick the first option because the first payment is smaller.
Reading an amortisation schedule properly
In a 30-year fixed loan, roughly the first third of the term goes mostly to interest. On a 300,000 loan at 5%, the first monthly payment sends about 1,250 to interest and 360 to principal; twenty years later that ratio has nearly reversed. This is why extra payments early are worth several times more than the same money paid late.
Compare offers on APR, not the headline rate: fees are folded into APR, and a loan advertised 0.15% cheaper can cost more over five years once the arrangement fee is counted.
Frequently asked questions
How is the monthly payment calculated?
With the standard annuity formula: payment = P × r × (1+r)^n / ((1+r)^n − 1), where r is the annual rate divided by twelve and n is the number of months.
Why is most of the early payment interest?
Interest is charged on the outstanding balance, which is largest at the start. As the balance falls, the interest portion shrinks and the principal portion grows — that is why overpaying early saves more than overpaying late.
Does this account for fees or insurance?
No. It covers principal and interest only. Add arrangement fees, insurance and taxes on top when comparing real offers.
What happens with a variable rate?
This assumes a fixed rate for the whole term. For a variable loan, recalculate whenever the rate changes — the remaining balance is the new starting point.
Does paying weekly instead of monthly save money?
Only because it front-loads the year: 52 weekly payments equal 13 monthly ones. The saving comes from paying more, not from the frequency itself.
What is the difference between interest rate and APR?
The rate prices the money; APR also includes fees, so it is the number to compare across offers.