Amortization Calculator

Find out how much interest you will pay over the life ofOur amortization calculator shows that with a 25 year
a loanloan, you will pay $155 back to the lender, but still $458
How much interest will you pay on your loan or ain interest to start with.
mortgage? An amortization calculator will tell you howAfter five years, the payments on the 20 year loan will
much. Does it matter? If you know you have to paybe:
$600 a month, isn't that enough to know? Yes.Interest $380 Repayment of loan $307
It does matter, because the amortization calculator willAfter 10 years:
show you that after one year you own almost noneInterest $282 Repayment of loan $404
of your house. If you sell it, you will have to pay the fullBy contrast, with the 25 year loan the figures are:
loan back. If the housing market was going badly, andAfter 5 years:
you didn't get what you sold your house for, you mightInterest $405 Repayment of loan $208
find you did not have enough money to buy the newAfter 10 years:
house you want. This situation can also affect youInterest $340 Repayment of loan $275
when you retire.So you can see that after 5 years, the person who
If you are young, you probably think you are doing welltook out the shorter loan is paying off an extra $100 of
buying a house because it will be a good investment,the loan each month. If you sell after this period, you
and will provide the basis of your retirementwill owe only $61,400 on the 20 year loan, against
investments. Usually, that is so, but if the housing$73,700 on the 25 year loan - so the amortization
market goes through a lean time - usually whencalculator shows that when you come to buy your
interest rates are high - you may find it is not such anext home, you will be able to buy a more expensive
good retirement investment.one, or get a smaller loan.
The amortization calculator will show you just howThe amortization calculator is a useful tool which
much you are borrowing, and how much you areshows a lot of information you will want to know
paying back, and how much interest you are payingabout your loan, and this could well affect your
each month. It will also show how much better off youretirement income. For example, how much will you
are if you take out a loan for a shorter than the normalhave to pay for the privilege of borrowing $100,000
period.over 20 years? $65,000 - in other words, you borrow
Consider a loan of $100,000 and the results shown by$100,000 and pay back $165,000.
the amortization calculator, which you can find in manyBy contrast, the amortization calculator shows that you
places on the internet. If you take out a 20-year loanwould have to pay back $84,000 - total repayments
at 5.5% interest, you will pay about $687 a month intotal $184,000. Of course, with higher interest rates you
repayments - if you are borrowing $200,000, justwill pay more. For example, at 7% - which you can
double the numbers, or put them into the amortizationexpect sometime during the period of the loan -
calculator.$112,000 with a 25 year loan. This means that you will
In the first month, you will pay $458 in interest, and onlypay off very little interest in the first few years.
pay $230 off the loan. If the loan lasts 25 years, theThese interest payments could have an influence on
amortization calculator will show that you pay lessyour ability to build a decent pension income, and the
each month, but the interest takes up a bigger chunk -amortization calculator will let you see the best way
And it is to get lower total payments each month thatforward.
people go for the longer term loans.