Amortisation explained: how a loan clears over time

What amortisation means

Amortisation is the process of paying off a loan through regular, equal instalments over a set term. Each payment is the same, but its make-up shifts: early on, more goes to interest; later, more clears the principal. By the final payment, the balance reaches zero.

Why the early payments feel slow

Because interest is charged on the outstanding balance, and that balance is highest at the start, the first payments are interest-heavy. It can look as though the debt is barely moving — but each payment shifts the ratio a little further toward principal, and progress accelerates.

What the schedule reveals

An amortisation schedule lists every payment with its interest and principal portions and the remaining balance. It shows the true cost of the loan and pinpoints where overpaying would remove the most future interest — usually the earlier, the better.

Overpaying and the schedule

An extra payment goes straight against the principal, shrinking the balance all future interest is calculated on. On a reducing-balance loan this compounds in your favour. Check for early-settlement terms first — see loan fees.

See your schedule

Use the calculator to generate the repayment and see how the balance falls over the term.

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