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Amortization
schedule
An amortization schedule is a table
detailing each periodic payment on a loan
(typically a mortgage),
as generated by an amortization calculator. Amortization schedules
are calculated so that each periodic payment for the entirety of
the loan is equal, making the repayment process somewhat simpler
under amortization
than with other models.
While every payment is applied towards both
the interest and the
principal of the loan, the exact amount applied to principal each
time (with the remainder going to interest) varies. An amortization
schedule reveals the specific dollar amount put towards interest,
as well as the specific put towards principal, with each payment.
Initially, a large portion of each payment is devoted to interest.
As the loan matures, larger portions go towards paying down the
principal.
Amortization
schedules run in chronological order. The first payment is assumed
to take place one full payment period after the loan was taken out,
not on the first day of the loan.
The last payment completely pays off the remainder of the loan. Often, the last
payment will be a slightly different amount than all earlier payments.
In addition to breaking down each payment
into interest and principal portions, an amortization schedule also
reveals interest-paid-to-date,
principal-paid-to-date, and the remaining principal balance on each
payment date.
Example amortization schedule
(To run your own numbers, try an amortization calculator.)
This amortization schedule is based on the
following assumptions:
- Principal = $100,000
- Annual Interest rate = 8%
- Number of payments = 360 (30 years x 12
months x 1 payment per month)
|
# of payments
|
Principal
|
Interest
|
Principal to-date
|
Interest to-date
|
Principal balance
|
|
1
|
67.09
|
666.67
|
67.09
|
666.67
|
99932.91
|
|
2
|
67.54
|
666.22
|
134.63
|
1332.89
|
99865.37
|
|
3
|
67.99
|
665.77
|
202.62
|
1998.66
|
99797.38
|
|
4
|
68.44
|
665.32
|
271.06
|
2663.98
|
99728.94
|
|
5...
|
68.90
|
664.86
|
339.96
|
3328.84
|
99660.04
|
|
...359
|
724.03
|
9.73
|
99264.28
|
164155.56
|
735.72
|
|
360
|
735.72
|
4.90
|
100000.00
|
164160.46
|
0.00
|
|
