Loan & Mortgage Calculator

See your monthly payment and total cost in seconds. Full amortization schedule included.

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How Loan Amortization Works

When you take out a fixed-rate mortgage or loan, your monthly payment stays the same for the entire term — but the split between principal and interest shifts dramatically over time. In the early years, the vast majority of each payment goes toward interest. Toward the end of the loan, nearly all of each payment reduces the principal balance.

This is called amortization — from the Latin amortire, meaning “to kill off.” Each payment gradually kills off the debt. The calculator uses the standard PMT formula to compute your monthly payment: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments.

For a $400,000 mortgage at 6% over 25 years, your monthly payment would be approximately $2,577. Over the life of the loan, you would pay roughly $373,000 in interest — nearly equal to the original loan amount. This is why making even small extra payments early can save tens of thousands of dollars.

The amortization table below the results shows every year of your loan: how much principal you paid down, how much went to interest, and what balance remains. Use the visual chart to see at a glance how the principal/interest ratio shifts year over year.

Understanding Your Mortgage

A few practical tips to reduce the total cost of your loan:

  • Down payment impact: A larger down payment reduces your loan principal directly. In Canada, putting down 20% or more avoids mandatory mortgage default insurance (CMHC), saving thousands in premiums added to your balance.
  • Rate vs. term tradeoff: A 15-year mortgage typically has a lower interest rate than a 30-year mortgage, and you pay far less total interest — but the monthly payment is significantly higher. Compare both scenarios here before deciding.
  • Extra payments go straight to principal: If your lender allows lump-sum prepayments, any extra amount reduces the principal immediately and cuts the total interest owed over the remaining term. Even one extra payment per year can cut years off a 25-year mortgage.
  • Interest-to-principal ratio: The ratio shown in the results tells you how much you pay in interest for every dollar of principal. A ratio of 0.8 means you pay $0.80 in interest for each $1.00 of principal — a useful quick benchmark when comparing loan offers.
  • Refinancing opportunity: If rates drop significantly after you lock in, refinancing can lower your monthly payment or reduce the total interest. Use this calculator to compare your current loan against a hypothetical refinanced version.

Frequently Asked Questions

⚠️ Is this calculator accurate for Canadian mortgages?
Important: This calculator uses US-style monthly compounding (annual rate ÷ 12). Canadian mortgages are legally required to compound semi-annually, which produces a lower effective monthly rate. For a $400,000 mortgage at 6% over 25 years, the difference is approximately $30–40/month — adding up to roughly $4,500–6,000 in extra interest over the life of the loan. For an exact Canadian figure, the monthly rate should be (1 + annual rate / 2)^(1/6) − 1 instead of annual rate / 12. Always confirm with your lender or mortgage broker.
What does this calculator not include?
This calculator covers principal and interest only — it does not include property taxes, homeowner's insurance, or mortgage default insurance premiums (CMHC in Canada, PMI in the US). Your actual monthly housing cost will be higher. Lenders often collect taxes and insurance in escrow alongside your mortgage payment, so always ask your lender for the full all-in monthly figure.
What is the difference between a 25-year and 30-year mortgage?
A 30-year mortgage has a lower monthly payment than a 25-year mortgage at the same rate, but you pay interest for 5 extra years — which substantially increases total interest paid. On a $400,000 loan at 6%, the difference in total interest between 25 and 30 years is roughly $70,000. The 25-year term saves money long-term; the 30-year term improves monthly cash flow. Use the pill buttons to compare instantly.
How does a down payment affect my mortgage?
Your down payment is subtracted from the purchase price to determine the loan principal. A higher down payment means a smaller loan, lower monthly payments, and less total interest paid. In Canada, a down payment below 20% requires CMHC mortgage default insurance — a premium of 2.8–4% added to your principal. The calculator lets you enter an optional down payment to see the adjusted loan amount automatically.

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