Equal Principal & Interest Payment Calculator

Equal Principal & Interest Payment is is a repayment method that pays a fixed amount including principal and interest over a fixed period. Interest is heavier early in the loan, and the principal portion increases over time.

During the repayment period you pay a fixed amount each month — the sum of principal and interest. Part of each payment goes toward the principal and the rest toward interest on the outstanding balance. As the balance decreases, the interest burden falls and the principal portion rises.

This method makes it easy to plan because the monthly payment is predictable, but the interest burden is heavy early on. It suits borrowers who want a constant payment, and banks also favor it because the total interest earned is higher.

Equal Principal & Interest Payment Calculation Method

With the PMT function you can build a schedule by first finding ① the principal-and-interest payment per period, then ② the interest per period, and finally ③ the principal portion. Each period's interest is found by multiplying the outstanding principal by the monthly rate.

r: interest rate, R: effective rate, k: compounding periods per year

How to calculate using the PMT function

The PMT function is mainly used in financial calculations, especially to compute total interest when a fixed amount is paid or received each month for a loan or investment. PMT stands for "Payment" and calculates the payment amount occurring at regular intervals over a fixed period. It is often used to compute monthly loan repayments or rent.

rate: the interest rate — the annual rate divided by months, or the rate adjusted to the payment period.
nper: the total number of payment periods (e.g. months).
pv: the present value, i.e. the current value of the loan or investment. Usually entered as a negative number.
fv (optional): the future value, i.e. the amount remaining after the loan or investment ends. Usually omitted.
type (optional): indicates when payments are made — 0 if payments occur at the end of each period (e.g. monthly), 1 if at the beginning. Usually omitted.

Result

Total paid:0.0 , Total interest:0.0

About This Calculator

Equal principal and interest (often called an amortizing or annuity loan) is the most common mortgage and personal-loan structure: you pay the same total amount every month for the life of the loan. Early payments are mostly interest and later payments are mostly principal.

Use this calculator to split a fixed monthly payment into its interest and principal parts and to see the remaining balance after every period.

Equal total payment is the standard mortgage structure: the instalment is fixed and the split shifts from interest-heavy to principal-heavy over the term. On 300,000,000 at 4 % over 30 years the payment is about 1,432,000, and in the first month only about 432,000 of that actually reduces the balance.

Key Formula:M = P × i / (1 − (1 + i)^−n) (i = monthly rate, n = number of payments)

Frequently Asked Questions

Why is almost my whole first payment interest?

Interest is charged on the outstanding balance, which is highest at the start of the loan. As you repay principal the balance falls, so a growing share of each fixed payment goes to principal and a shrinking share to interest.

How does this differ from an equal principal loan?

Equal principal and interest keeps the monthly payment flat, so it is easier to budget. Equal principal starts higher and decreases, but you pay less total interest because the balance falls faster.

Can I pay off an amortizing loan early?

Yes. Most amortizing loans allow extra principal payments, and every extra payment shortens the term and cuts future interest. Check whether your lender charges a prepayment penalty first.

Why does the balance barely move at first?

At a 4 % annual rate the monthly rate is 0.333 %, so the first months interest on 300,000,000 is 1,000,000. With a payment of 1,432,000 only 432,000 goes to principal. Principal overtakes interest around year 17.

What happens if I repay extra?

An extra payment goes entirely to principal, shortening the term and cutting total interest without changing the instalment. Paying one extra instalment a year on a 30-year mortgage typically removes four to five years.