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See exactly how much of your mortgage goes to you vs. to the bank. Discover how a small extra payment changes everything.
Step-by-step breakdown of the underlying equations.
| Year | Principal Paid | Interest Paid | Remaining Balance |
|---|---|---|---|
| Year 1 | $3,353 | $19,401 | $296,647 |
| Year 2 | $3,578 | $19,177 | $293,069 |
| Year 3 | $3,817 | $18,937 | $289,252 |
| Year 4 | $4,073 | $18,681 | $285,179 |
| Year 5 | $4,346 | $18,409 | $280,833 |
| Year 6 | $4,637 | $18,118 | $276,196 |
| Year 7 | $4,947 | $17,807 | $271,249 |
| Year 8 | $5,279 | $17,476 | $265,970 |
| Year 9 | $5,632 | $17,122 | $260,338 |
| Year 10 | $6,009 | $16,745 | $254,328 |
| Year 11 | $6,412 | $16,343 | $247,916 |
| Year 12 | $6,841 | $15,913 | $241,075 |
| Year 13 | $7,299 | $15,455 | $233,776 |
| Year 14 | $7,788 | $14,966 | $225,987 |
| Year 15 | $8,310 | $14,445 | $217,677 |
The True Cost of a Loan Visualizer shows exactly where your money goes over the life of a loan. It breaks down each payment into principal (money that reduces your debt) and interest (bank profit), revealing the true cost of borrowing that isn't obvious from just the interest rate.
This tool also demonstrates the power of extra payments by showing how even small additional amounts can save tens of thousands of dollars and years off your loan term.
Scenario: Borrowing $300,000 over 30 years at 6.5% APR.
Scenario: Same $300,000 borrowed at 6.5%, but choosing a compressed 15-year amortization schedule.
Scenario: Financing a new vehicle purchase of $35,000 at typical 7.9% auto interest over 60 months.
Interest is calculated on your remaining balance. Early in the loan, your balance is highest, so most of your payment goes to interest. As the balance decreases, more of each payment goes to principal. This is called amortization—the same payment covers different ratios of interest vs. principal over time.
Extra payments reduce your principal balance immediately, which means less interest accrues each subsequent month. The savings compound over time. Early extra payments are most valuable because they reduce interest for the remaining decades of the loan.
The interest rate is just the cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus other loan costs like origination fees, points, and mortgage insurance, expressed as a yearly rate. APR gives you a better picture of total borrowing cost.
A 15-year mortgage has higher monthly payments but lower total interest (often 40-60% less over the life of the loan) and typically lower rates. A 30-year mortgage has lower payments, providing flexibility and cash flow. Many choose 30-year terms but make extra payments when possible.
Refinancing to a lower rate reduces your monthly payment and total interest—but restart the amortization schedule. If you've paid 10 years on a 30-year loan and refinance to a new 30-year term, you're extending your payoff. Consider refinancing to a shorter term or making extra payments to offset this.