A home loan amortization calculator is a vital tool for understanding the repayment structure of your mortgage. Amortization is the process of paying off a debt over time through regular installments. Each payment you make on a home loan consists of two parts: principal and interest. Initially, a larger portion of your payment goes towards interest, and as you pay down the loan, more of your payment is applied to the principal.
How Amortization Works
The standard formula for calculating the monthly payment (M) of a loan is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal loan amount
i = Monthly interest rate (Annual interest rate divided by 12)
n = Total number of payments (Loan term in years multiplied by 12)
Each month, after the interest portion is paid, the remaining amount of your payment reduces the principal balance. The interest for the next month is then calculated on the new, lower principal balance. This gradual reduction in principal is what leads to less interest being paid over time.
Key Components of an Amortization Schedule
Month: The sequential number of the payment period.
Payment: The fixed amount paid each month (calculated using the formula above).
Principal: The portion of the payment that reduces the outstanding loan balance.
Interest: The portion of the payment that covers the cost of borrowing money.
Balance: The remaining amount owed on the loan after each payment.
Why Use an Amortization Calculator?
Budgeting: Predict your exact monthly housing costs.
Financial Planning: Understand how much interest you'll pay over the life of the loan and plan for extra payments.
Comparing Loans: Evaluate different loan offers by seeing their respective payment schedules and total interest costs.
Making Extra Payments: See the impact of paying more than the minimum due on reducing your loan term and total interest paid.
This calculator helps visualize the amortization process, providing clarity and confidence in your homeownership journey.
function calculateAmortization() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTermYears").value);
var monthlyPayment = 0;
var totalInterestPaid = 0;
var totalPrincipalPaid = 0;
var totalAmountPaid = 0;
// Input validation
if (isNaN(loanAmount) || loanAmount <= 0 ||
isNaN(annualInterestRate) || annualInterestRate < 0 ||
isNaN(loanTermYears) || loanTermYears 0) {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// Handle zero interest rate case
monthlyPayment = loanAmount / numberOfPayments;
}
// Clear previous amortization table
var tableBody = document.getElementById("amortizationBody");
tableBody.innerHTML = "";
var remainingBalance = loanAmount;
var runningTotalInterest = 0;
var runningTotalPrincipal = 0;
for (var i = 1; i <= numberOfPayments; i++) {
var interestPayment = remainingBalance * monthlyInterestRate;
var principalPayment = monthlyPayment – interestPayment;
// Adjust last payment to ensure balance is zero
if (i === numberOfPayments) {
principalPayment = remainingBalance;
monthlyPayment = principalPayment + interestPayment;
}
remainingBalance -= principalPayment;
runningTotalInterest += interestPayment;
runningTotalPrincipal += principalPayment;
// Prevent negative balance due to floating point inaccuracies
if (remainingBalance < 0) {
remainingBalance = 0;
}
// Add row to table
var row = tableBody.insertRow();
var cellMonth = row.insertCell(0);
var cellPayment = row.insertCell(1);
var cellPrincipal = row.insertCell(2);
var cellInterest = row.insertCell(3);
var cellBalance = row.insertCell(4);
cellMonth.textContent = i;
cellPayment.textContent = monthlyPayment.toFixed(2);
cellPrincipal.textContent = principalPayment.toFixed(2);
cellInterest.textContent = interestPayment.toFixed(2);
cellBalance.textContent = remainingBalance.toFixed(2);
}
totalInterestPaid = runningTotalInterest;
totalPrincipalPaid = runningTotalPrincipal;
totalAmountPaid = loanAmount + totalInterestPaid;
// Display results
document.getElementById("monthlyPayment").textContent = monthlyPayment.toFixed(2);
document.getElementById("totalInterest").textContent = totalInterestPaid.toFixed(2);
document.getElementById("totalPrincipal").textContent = totalPrincipalPaid.toFixed(2);
document.getElementById("totalAmountPaid").textContent = totalAmountPaid.toFixed(2);
}