The payment is flat. The split inside it is not. Understanding the crossing point explains most of what people find surprising about a mortgage.
A fixed rate mortgage payment is a single number that never changes, but it is made of two parts that change every month. Interest is charged on the balance you still owe. Principal is whatever is left over after the interest is paid. Because the balance falls each month, the interest portion falls and the principal portion rises. The total stays flat.
That produces the effect borrowers find counterintuitive. Early payments are mostly interest. On an illustrative $400,000 loan at 6.500% over thirty years, the first payment is roughly $2,528, of which about $2,167 is interest and only about $361 reduces the balance. The point where principal finally exceeds interest arrives at month 233 of 360, roughly two thirds of the way through the term.
Term and rate both move that crossing point, and the term moves it much harder. Shorten the same illustrative loan to fifteen years and the crossing point moves to month 53 of 180, inside the first five years, because the schedule has half the time to retire the same balance. The monthly payment rises from about $2,528 to about $3,484. The total interest paid falls from roughly $510,000 to roughly $227,000.
This is also why an extra principal payment is worth so much more in year two than in year twenty. Money applied to principal early removes interest from every remaining month of the schedule. The same amount applied near the end removes almost nothing, because there is almost no interest left to remove.
Ask for the amortisation schedule before you sign, not after. It is a plain table: month, payment, interest, principal, remaining balance. Once you can see the crossing point on your own loan, the trade between a lower payment and a shorter term stops being a matter of opinion.
Illustrative sample figures for a template demonstration. Not a rate quote, not an offer to lend, and not live market data.
