Amortisation explorer: drag the rate
Every loan payment splits into interest and principal, and the mix flips as the balance falls. This chart stacks the two for all of the payments in a loan. At the default setting, a 30 year loan at 6 percent, principal first beats interest at payment 223 of 360, more than 18 years in. The settings are illustrative.
Annual rate, drag the chart up or down
6.00%
Principal first beats interest at payment 223 of 360, which is 18.6 years in.
- Payment each month
- $1,498.88
- Interest over the term
- $289,595.47
- Interest against amount borrowed
- 116%
- Crossover payment
- 223 of 360
In short
- Drag up or down anywhere on the chart to move the interest rate.
- Drag the amount borrowed and term sliders to reshape the loan.
- Watch the dashed line, which marks the payment where principal first overtakes interest.
- Read the payment, the interest total and the crossover number above the chart.
What the two bands are
The payment on a level-payment loan is the same every month, so the top edge of the block is flat. What changes underneath it is the mix. Interest for a month is the balance at the start of that month times the monthly rate, so it is largest at the start and shrinks as the balance falls. Principal is whatever is left of the payment, so it grows by exactly as much as interest shrinks.
That is all amortisation is, spelled amortization in American English: a fixed payment that covers the interest first and puts the remainder against the balance. The loan payment calculator works out the payment itself.
Why the crossover sits so far in
At the default setting the crossover lands at payment 223 of 360, more than 18 years into a 30 year loan. Every payment before that puts more into interest than into the balance, which is why the balance moves so little in the early years.
The crossover depends on the rate and the term, not on how much was borrowed. Double the amount and both bands double, so the point where they are equal does not move. Drag the rate down to 3 percent and it jumps forward to payment 84. Drag it up to 9 percent and it slides back to payment 269.
Term moves it more than the rate does
Halving the term does more than halve the wait. At 6 percent over 15 years the crossover comes at payment 43 of 180, about a quarter of the way in, against 62 percent of the way in over 30 years. A shorter term means a bigger payment, and the extra goes entirely to principal, so the balance falls faster from the first month.
The totals move with it. Over 30 years at 6 percent the interest adds up to more than the amount borrowed. Over 15 years at the same rate it is closer to half of it.
Common questions
What is the crossover payment?
It is the first payment where more of the money goes to the balance than to interest. Before it, the larger share is the cost of borrowing. After it, the larger share is yours. The chart marks it with a dashed line and a label.
Does paying extra move the crossover?
Yes. Anything paid above the scheduled amount comes straight off the balance, and a smaller balance means less interest the following month, which pulls the crossover forward. This chart shows the scheduled loan on its own, so the marker is the point you reach paying exactly what is due.
Why is so much of an early payment interest?
Interest is charged on the balance still owed, and at the start almost all of it is still owed. On a 30 year loan at 6 percent the first month of interest is about five sixths of the payment, so only the last sixth touches the balance.
Are the numbers on the chart a quote for a real loan?
No. The settings it opens on, a 30 year loan at 6 percent, are illustrative teaching values picked because they show the shape clearly. Move the sliders to the numbers on a loan you are looking at and every figure on the chart follows them. Either way what it draws is the scheduled loan, the interest and principal the agreement already sets out, which is arithmetic rather than a forecast. It is educational material, not financial advice.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.