How amortization works
Each payment covers the month's interest first, then reduces principal. Early payments are mostly interest; late ones are mostly principal. On a 250,000 mortgage at 6.5% over 30 years, the first payment puts roughly 1,354 toward interest and only 226 toward principal.
Why extra payments matter so much
An extra 100/month on that loan cuts roughly four years and tens of thousands in interest, because every extra dollar reduces the balance that interest is charged on. The earlier it happens, the larger the effect.
Reading the schedule
- Interest by year shows where the pain is concentrated
- Balance after 12 months tells you your real equity position
- Compare 15- vs 30-year terms on total interest, not payment size
- Refinancing resets the schedule — recalculate after any change
For business loans
The same maths applies to equipment finance and SBA loans. Where a loan has fees or an interest-only period, the effective cost is higher than the nominal rate — model the fee into the principal for an honest comparison.
Frequently Asked Questions
Why is most of my early payment interest?
Interest is charged on the outstanding balance, which is largest at the start.
How much does an extra payment save?
It depends on timing; earlier extra payments save disproportionately more.
Can I see the full schedule?
This tool shows the first 12 months and yearly totals — enough for planning without a 360-row page.
Assumptions & disclaimer
Results are estimates for planning. Fee schedules, tax brackets and deduction limits change; confirm current figures with the marketplace, the IRS or a qualified accountant before making decisions. Nothing here is financial, tax or legal advice.
Privacy & Your Data
BizCalcTool runs entirely in your browser. The figures you enter are never uploaded, stored or shared — there is no backend to send them to.