Mortgage Amortization Calculator

Amortization is the process of paying off your mortgage through equal regular payments. Each payment covers the interest on your remaining balance plus some principal. Because your balance is largest at the start, most early payments go toward interest — that ratio gradually flips over the life of the loan, so by the final years almost everything goes to principal.

Interest is calculated on your outstanding balance each period. At the start that balance is at its peak, so the interest portion is also at its highest. As you pay down principal the balance shrinks, which is why the interest-to-principal ratio gradually shifts in your favour over time. On a 30-year mortgage at 6.5%, roughly 86% of your first payment goes to interest.

In Canada, mortgages compound semi-annually (twice per year) as required by the Bank Act. US mortgages compound monthly (12 times per year). Because of semi-annual compounding, a Canadian mortgage at 6.5% has a slightly lower effective monthly rate than a US mortgage at 6.5% — resulting in lower monthly payments and less total interest. This calculator applies the correct formula for each country: US uses rate/12, Canada uses (1 + rate/200)^(1/6) − 1.

On a $400,000 mortgage at 6.5% over 30 years, adding $200/month from day one saves approximately $80,000–$100,000 in total interest and cuts around 5–6 years off the loan. The earlier you start, the more you save — extra payments in year 1 eliminate compounding interest on that principal for the remaining 29 years. The same $200/mo started in year 10 saves significantly less.

Regular biweekly divides your annual total by 26, so each payment is slightly less — but you still pay the same annual amount as monthly. Accelerated biweekly takes half your monthly payment and pays it 26 times per year. Since 26 × (monthly/2) = 13 monthly payments per year instead of 12, you effectively make one full extra monthly payment annually. That one extra payment each year is what accelerates your payoff by years.

Extra mortgage payments may not be the best use of money if: (1) you carry high-interest debt like credit cards — always pay those first; (2) your mortgage rate is low enough that investing the difference could earn more (roughly, if your expected investment return after tax exceeds your mortgage rate); (3) you would deplete your emergency fund; or (4) your mortgage has a prepayment penalty that offsets the interest savings. The right answer depends on your rate, tax situation, risk tolerance, and financial cushion.