What is amortisation?
The process of paying off a loan with equal regular payments, where each payment is split between interest and repaying the principal. An amortisation schedule lists that split for every period until the balance reaches zero.
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Amortization Calculator
Amortisation schedule showing how each payment splits between interest and principal.
EMI = P·r(1+r)^n/((1+r)^n−1); interestₘ = balance·r
Frequently asked questions
Why does the interest portion shrink over time?
Interest is charged on the balance still owing. Early on that balance is large, so most of each payment is interest. As the balance falls, the interest charged falls with it, leaving more of the same payment to chip away at the principal.
Is the monthly payment always the same?
On a standard fixed-rate loan, yes — the EMI stays constant. What changes is the mix inside it: the interest slice gradually gives way to the principal slice as the loan winds down.
How do I read the stacked area chart?
Time runs left to right across the loan term. The interest band starts thick and tapers towards zero, while the principal band starts thin and grows to fill the space. The crossover point is where you begin repaying more loan than interest each year.
Where is this used in real life?
Home loans — seeing that on a 30-year mortgage the first years barely dent the principal. Car loans — judging how much you still owe if you sell early. Extra repayments — understanding why paying more in the early years saves the most interest, since it attacks the balance while interest charges are highest.