AmortizationTools

Principal vs Interest Calculator

See the principal and interest split for any year of a loan, with the equity built and the balance at year end.

Last reviewed

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Free · No sign-up · Runs in your browser

Everyone knows early loan payments are mostly interest. Very few people know the actual proportion, and it is consistently higher than expected - above eighty percent in year one of a typical thirty-year loan.

This calculator reports the split for whichever year you choose, along with the equity built by payments and the balance remaining at the end of it.

Your numbers

Results update as you type. Nothing is sent anywhere.

Result

Share going to interest

82.03%

Interest paid that year

$21,214

Principal paid that year
$4,646
Share going to principal
17.97%
Balance at year end
$336,888
Equity built by payments
$13,112
Monthly payment
$2,155

In year 3, 82.03% of what you pay goes to interest.

The crossover point - where principal first exceeds interest in a single payment - depends on the rate and term, not on the loan size.

Yearly amortization summary

YearPrincipal paidInterest paidRemaining balance
1$4,101$21,759$345,899
2$4,365$21,495$341,534
3$4,646$21,214$336,888
4$4,945$20,915$331,943
5$5,263$20,597$326,680
6$5,601$20,259$321,079
7$5,962$19,899$315,118
8$6,345$19,515$308,773
9$6,753$19,107$302,019
10$7,187$18,673$294,832

How to use the principal vs interest calculator

  1. Enter the loan amount, rate and original term.
  2. Enter the year of the loan you want to examine.
  3. Read the interest and principal shares for that year.
  4. Use the yearly table to see the whole trajectory.

What people use this for

  • Understanding how little equity early payments build.
  • Estimating interest paid in a specific year.
  • Explaining amortisation to a first-time borrower.
  • Assessing what a refinance would reset.

Worked examples

Every figure below is produced by running this calculator against the example inputs, so the numbers always match the tool.

Year three of a 30-year loan

$350,000 at 6.25% over 30 years, examining year three.

Share going to interest
82.03%
Interest paid that year
$21,214
Equity built by payments
$13,112

Year twenty-five of the same loan

Late in the term, when principal dominates each payment.

Share going to interest
29.2%
Share going to principal
70.8%
Balance at year end
$110,802

The trajectory, not just the number

The yearly table is the useful part. It shows the interest share falling slowly for the first decade, then accelerating downward as the balance drops - a curve rather than a line.

That shape explains several things at once: why early overpayments are worth so much more than later ones, why selling in year three recovers little equity from payments, and why refinancing into a fresh term is more costly than the rate difference suggests.

Equity from payments is not the whole picture

The equity figure here is the reduction in balance from payments only. In practice, equity is that plus whatever has happened to the property value, which can be considerably larger or negative.

Keeping the two separate is worth doing. Payments build equity predictably; market movements do not, and conflating them makes both harder to reason about.

Methodology and assumptions

What this calculator does, and what it deliberately does not do.

  • The full schedule is built and the twelve payments of the chosen year are summed for principal and interest.
  • Equity built is the reduction in balance from the start of the loan to the end of the chosen year.
  • Property appreciation is not included. A fixed rate is assumed.
  • Results are estimates. Real quotes depend on credit, income, property, loan programme and lender pricing at the time of application.
  • Nothing you type is transmitted or stored - the calculation runs entirely inside your browser.

This calculator is provided for informational and educational purposes only. Results are estimates and may not reflect actual rates, fees, taxes, or market conditions.

This website is not a lender, a mortgage broker or a financial adviser. It does not originate loans, does not accept applications and does not forward your details to anyone.

Actual loan terms depend on credit history, income, the property, the loan programme and lender pricing at the time of application. Only a lender can tell you what you qualify for.

Frequently asked questions

When does principal exceed interest?

It depends on the rate and term rather than the loan size. On a thirty-year loan at typical rates it is usually somewhere in the late teens.

Can I use this for tax records?

It estimates interest paid in a year on the stated assumptions. Your lender’s annual statement is authoritative, and deductibility is a question for a tax professional.

Does an extra payment change the split?

Yes - it reduces the balance, so subsequent interest falls and the principal share rises faster. Use an extra payment calculator to model it.

Why does this matter for refinancing?

Because a new loan restarts at the interest-dominated part of the schedule. That reset is a real cost even when the rate is lower.

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