Rates Explained: Mortgages

Where your payment goes

At first, most of your payment is the bank's fee. Later, most of it pays off your home.

The bank's fee (interest) depends on how much you still owe.

At the start you owe a lot, so the fee is big. Most of your payment goes to the bank's fee, and only a little pays off your home.

Early on$$$$Bank's feeYour homeYears later$$$$Bank's feeYour home

But every payment pays off a little. Then you owe less, so next month's fee is a bit smaller. That leaves more of your payment for your home.

It starts slow, then speeds up, like a snowball rolling downhill.

Your numbers. How each year's payments are split. Drawn with your numbers from the calculators: loading….