Amortisation Calculator

- May 09, 2025
| |

Calculate loan amortisation schedules based on loan amount, interest rate, loan term, and payment frequency. This calculator helps you understand how your payments are applied to principal and interest over time.

Loan Information

£
%
£

Advanced Options

About Loan Amortisation

Loan amortisation is the process of paying off a debt through regular payments over time. Each payment is split between principal and interest, with more interest paid at the beginning of the loan term and more principal paid toward the end.

Understanding Your Payment
  • Principal: The original loan amount you borrow.
  • Interest: The cost of borrowing the money, calculated as a percentage of the principal.
  • Term: The length of time to repay the loan in full.
  • Amortisation Schedule: A table showing the breakdown of each payment, including how much goes to principal and interest.
Benefits of Extra Payments

Making extra payments toward the principal can significantly reduce the total interest paid and shorten the loan term. Even small additional payments can make a big difference over time.

Payment Frequencies
  • Monthly: 12 payments per year (standard for most loans).
  • Bi-Weekly: 26 payments per year (one payment every two weeks).
  • Weekly: 52 payments per year (one payment per week).

Switching from monthly to bi-weekly or weekly payments can save you money by making more frequent principal reductions and potentially making the equivalent of one extra monthly payment per year.

What Is an Amortization Calculator?

An amortization calculator is a handy tool designed to help you understand how loans work. It calculates your loan’s monthly payments based on the loan amount, interest rate, and term length. By breaking down payments into principal and interest, it gives you a clearer picture of your Financial commitment over time.

How to Use the Amortization Calculator

Using the amortization calculator is simple. You enter details like your loan amount, interest rate, and loan term. You also specify how often you'll make payments, whether monthly, bi-weekly, or weekly. You can even add extra payments to see how they impact your loan payoff time and total interest.

Key Features of the Calculator

  • Loan Information: Input your loan amount, interest rate, and loan term.
  • Payment Frequency: Choose how often you'll make payments for more accurate results.
  • Extra Payments: See how additional payments can reduce your overall debt.
  • Advanced Options: Adjust settings like decimal places and interest compounding to suit your needs.

Understanding Your Loan Payments

Each payment you make on your loan consists of two parts: principal and interest. At the start of your loan, more of your payment goes towards interest. As time goes on, a larger portion of your payment goes towards paying down the principal. This is known as the amortization process.

Benefits of Extra Payments

  • Reduced Interest: Paying extra can lower the amount of interest you pay over time.
  • Shortened Loan Term: Extra payments can help you pay off your loan sooner.
  • Improved Equity: You'll build equity in your home faster with extra payments.

Payment Frequencies Explained

The frequency of your payments can make a significant difference in how much interest you pay overall. Standard monthly payments are common, but you might also consider bi-weekly or weekly payments. This can lead to more frequent principal reduction and might even save you money in the long run.

Amortization Schedule Insights

The calculator can provide a complete amortization schedule. This schedule shows each payment, along with how much goes toward principal and interest. You'll also see the balance remaining after each payment, giving you a clear view of your debt reduction journey.

Why an Amortization Calculator is Essential

Using an amortization calculator is essential for anyone considering a loan. It allows you to see how different interest rates and terms can affect your payments. By understanding your options, you can make informed financial decisions that align with your long-term goals.