Understanding Your Amortization Schedule

An amortization schedule is a table that shows every payment over the life of a loan. It breaks down each payment into how much goes toward interest, how much reduces the principal, and what the remaining balance is after each payment. Understanding this table helps you track your real progress in paying off debt.

The columns explained

Each row in the schedule represents one payment. For a monthly loan, each row corresponds to one month. The key columns are:

• Payment number: The sequence count (1, 2, 3… n)
• Payment amount: The fixed monthly payment (constant throughout in French amortization)
• Interest portion: The part of the payment that goes to interest for that period
• Principal portion: The part that reduces the outstanding balance
• Remaining balance: The amount owed after the payment is applied

How interest and principal shift

In French amortization, the payment is fixed, but its composition changes dramatically over time. Early payments are mostly interest; late payments are mostly principal. This happens because interest is calculated on the remaining balance, which is highest at the start.

Consider the first few months of a $200,000 mortgage at 6% EAR over 30 years (360 monthly payments). The periodic rate is roughly 0.00487 per month. In month 1, the interest on a $200,000 balance is approximately $974. The remaining $373 of the payment reduces the principal. By month 180 (year 15), the balance is much lower, so the interest portion shrinks and the principal portion grows correspondingly.

The crossover point

There is a point in every amortization schedule where interest and principal portions are equal. For a 30-year mortgage at 6%, this happens somewhere around year 12 or 13. Before this crossover point, you are paying more in interest than you are reducing principal. After it, the principal reduction accelerates.

This has practical implications for extra payments. Making extra payments before the crossover point has a much larger impact on total interest paid than the same extra payments made later, because early extra payments skip all the future interest on that amount.

Reading your own schedule

When you run a calculation in Amorta, the schedule table shows exactly these columns for each payment interval. You can see the cumulative interest paid at the bottom of the table, which helps you understand the true cost of the loan over its full term.

Pay attention to the interest column in the early rows to see how much of your payment is "wasted" on interest versus building equity. This perspective helps when evaluating whether to make extra payments or when comparing loan offers.