What is a Mortgage Amortization Schedule?

A mortgage amortization schedule breaks down the mortgage payment into components of allocated interests and principal.

It will show you the amount of interest that you are paying to the bank or agency. In most cases, people use a mortgage calculator on their free amortization schedule. Using a loan amortization schedule can be advantageous as it will help you save money. However, you must have a thorough understanding on how to cut down the principal that you are paying as well as on how to save thousands from interest payments.

Every payment made on a loan is divided between the interests and the principle on the loan amortization schedule. The schedule provides the exact remaining amount of the loan after every payment is made. In financial institutions, mortgage amortization schedule are used to determine the outstanding amount of the loan at a certain period of time. However, the schedules are only created for easy use but the actual formula to determine the amortization is still used by the institutions.

Free amortization schedules are used with long-term debts such as personal loans, car loans, and mortgages. Its purpose is to record the compounding interests over time. It consists of five different columns: the principal paid, the interest, the payment, outstanding balance, and time period whether in months or years. The outstanding balance is the complete value of the loan minus the paid amounts received. The payment is the whole amount paid in every period.

There are different kinds of amortizations that use a mortgage amortization schedule such as negative amortization, annuity, declining balance, or straight line.