Amortization Schedule for a Mortgage

Amortization Schedule For A Mortgage is a tabular representation of periodic loan payments that shows how much this loan payment does into repayment of principal amount and how much is for the interest payment. This schedule allows homeowners to keep track of the principal amounts and interest amounts paid towards the lent amount.

The top line of the schedule reflects the total payment due, while the last line indicates the total principal and interest amounts paid until the end of the loan term. This schedule helps taxpayers when they fill up their income tax and apply for applicable deductions or advantages.

Amortization schedule for a mortgage, like any other schedule, provides a clear representation of the principal and interest payments over time. It allows borrowers to keep a watch on the frequency of payments and the amount that is still left to be repaid until the end of the term. In addition, the schedule enables taxpayers to fill in the income tax form and include details fir any tax benefits or deductions, if applicable.

Although all the periodic payments are of equal amount, the initial periodic payments in the schedule include a higher amount of interest. In contrast, the later periodic payments in the schedule are majorly comprised of principal payment.

This variation in the mix of interest component and principal component occurs because, in a loan amortization schedule, the interest charged in the later periodic payments decreases as the outstanding loan depreciates owing to the payment of the principal component.

Finally, the last line of the mortgage's amortization schedule table displays the total amount paid in interest and principal during the entire tenure of the term loan.

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The primary component of the amortization table for a mortgage is the periodic payment, the principal payment, and the interest payment.

To know how to calculate different elements used in amortization schedule for a mortgage. The first among them is the periodic payment, which is calculated using the below-mentioned formula:

Periodic Payment = Outstanding Loan * Rate of Interest * (1+ Rate of Interest)^{No of Periods} /

The formula for interest paid during a single period (between two successive periodic payments) is straightforward as given below,

Interest paid = Outstanding loan * Rate of interest

The principal component of the term loan in the periodic payment is calculated as,

Principal repayment = Periodic payment - Interest accrued

Let us assume that there is a company that has $1,000,000 of loan outstanding, which has to be repaid over the next 30 years. The equated annual repayment will be made annually at an interest rate of 12%.

Therefore, as per the question,

• Outstanding loan = $1,000,000
• Rate of interest = 12%
• No. of period = 30 (since payments are annual)

Using the above information, we have calculated the Periodic Mortgage Payment for the Amortization Schedule excel table.

So the Periodic Payment will be-

Then we have calculated the interest paid using the formula mentioned above.

So the Interest Paid will be -

So the table below is the mortgage amortization schedule in excel based on the above information,

Therefore, from the above table, it can be seen that the total interest paid is $2,724,309.73 on a loan of $1,000,000, i.e., the interest paid is approximately 2.7 times the actual loan. Also, from the table, it can be seen that the interest paid is more than the principal payment till the 24th year, which indicates the fact that interest payments are higher than the principal payment initially.

You can download this Mortgage Amortization Schedule Excel Template here - Amortization Schedule Excel Template

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This article has been a guide to what is Amortization Schedule For A Mortgage. Here, we explain withe concept along with its formula, how to create it, and examples. You can learn more about Excel Modeling from the following articles –

• Loan Principal
• Explain Unsecured Loans
• What is Subprime Loans?
• Calculate Loan to Value Ratio