A loan is repaid in level monthly payments, but the split inside each one shifts every month. Early on, almost all of it is interestThe lender's charge for the money still owed, levied on the balance each period. As the balance falls, the interest slice of each payment shrinks. on a balance you've barely dented; only near the end does most of a payment go to principalThe part of a payment that actually reduces what you owe. It starts small and grows every month as the interest slice shrinks.. That's amortization — and it's why the total interest can rival the amount you borrowed. It's compound growth working against you.
Borrow €200 000 at 6% over 30 years and you'll repay €431 676 all told — of which €231 676 (54%) is interest.
Each column is one year of payments, the same height every year — what shifts is the split between principal below and interest above. It starts mostly interest and tilts toward principal as the balance falls. The marker is the tipping point: after 18.6 years, more of each payment goes to principal than to interest.
| Term | Monthly payment |
|---|---|
| 10 yr | €2,2kinterest: €66k |
| 15 yr | €1,7kinterest: €104k |
| 20 yr | €1,4kinterest: €144k |
| 25 yr | €1,3kinterest: €187k |
| 30 yrnow | €1,2kinterest: €232k |
| 40 yr | €1,1kinterest: €328k |
A longer term shrinks the monthly payment but stretches out the balance you pay interest on — so the bar (total interest) grows even as the payment shrinks. The shorter the term you can carry, the less you hand the lender. Click a term to load it above.