Mortgage Calculator with Lump Sums

Amortization of Principal By Year

Most graphical representations of mortgage principal over time are similar in shape to the graph below.

In a nutshell, while the principal amount is gradually reduced, the amount of interest accrued each year is also decreased. Because of this, as you pay into your mortgage, your dollars go further towards principal in the later years of the amortization.

A consequence of this effect is that the principal amount decreases faster the further you are into a mortgage, and the slope of the graph becomes steeper.

Yearly Interest Paid

The following graph demonstrates how interest is paid on a mortgage over time. Because the principal amount is decreasing over time, so too is the interest paid per year.

Payment Allocation

In many mortgages, the payment amounts are fixed, initially calculated so that given a set amount of time, at a specific interest rate, the loan's principal amount can be paid off on schedule.

A payment allocation graph shows how much of each payment goes directly to interest, and how much goes to reducing the principal. As can be seen on a payment allocation graph, the portion of a payment allocated to accruing interest decreases, and the amount to principal increases over time.