Mortgage interest is fully amortized.  On a fixed-rate mortgage, the principal and interest payment never changes.  What does change is the amount that is applied toward both interest and principal each month.  \

On a fixed-rate mortgage, each month a slightly higher amount of your payment is applied toward principal repayment.  The total amount of interest paid monthly, and over the life of the loan, is determined by loan amount, loan term, and interest rate.

30-Year Fixed Amolet’sation

and example, lets take at $350,000 at an interest rate of 5.75% for 30 years.  The monthly fixed principal and interest repayment for this scenario is $2,043.  On the very first payment, $1,677 is applied toward interest t with $365 appl30-year and principal.

On a 30-year fixed, for the first 10 years, the majority of the payment is applied toward interest with a smaller amount going toward principal.  In the same scenario above, at the start of the 10th year, $1,397 is applied toward interest with $645 going to principal repayment.

20-Year Fixed Amortization

A 20-year fixed rate mortgage typically carries a slightly lower interest rate compared to a 30-year fixed.  Based on a $350,000 loan amount for 20 years at 5.5% the fixed monthly principal and interest payment is $2,408.  On the first payment, $1,608 is applied toward interest with $803 going to principal repayment.

On the 20-year amortization after the start of year seven $1,291 is applied toward interest with $1.112 going toward principal repayment.

15-Year Fixed Amortization

A 15-year fixed rate mortgage carries a much lower interest rate compared to a 30-year fixed.  At the same time, a 15-year fixed will carry a significantly higher monthly payment.  The good news about the higher monthly payment is that the additional amount is all applied to the principal.

On a 15-year fixed at 4.74% on a $350,000 loan amount, the monthly fixed principal and interest payment is $2,722.  Right from the start, on a 15-year fixed, nearly the same amount is applied toward both interest and principal.  On the first monthly payment, $1,385 goes to interest with $1,337 applied to the principal.

At the start of the fifth year, on the 15-year fixed, $1,034 goes to the principal with $1,688 going to the principal.  Clearly, on a 15-year fixed, the principal balance is paid down more quickly with significantly less interest over the life of the loan.