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Frequently asked questions

Optimize your mortgage: Compare French, German, and American systems. Decide between reducing term or monthly payment.

How it works?

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1. Enter your data

Fill in the amount, term, and interest rate of your loan.

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2. Choose the system

Select between French, German, or American systems to compare.

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3. Analyze the result

Review your monthly payment and total cost before deciding.

Frequently asked questions

No, the calculation is done entirely in your browser. Your data is not sent to any server.
It is the most common. You always pay the same monthly installment, but at the beginning, you pay more interest and less principal.
No, this is an informative simulation tool. Final conditions depend on your bank.

When you make a monthly loan payment, it’s not just one lump sum disappearing into the bank's vault. It is split into two distinct buckets:

  • **Interest:** The fee you pay to the lender for the privilege of borrowing money.
  • **Principal:** The portion that actually reduces your loan balance.

In the early years of a typical mortgage (especially under the French system), a huge chunk of your payment goes strictly to interest. As time passes, the balance shifts: you pay less interest and more principal. This shift is what our calculator visualizes for you.

French System (Constant Payment)

This is the global standard for residential mortgages. Your monthly payment remains exactly the same for the entire term (e.g., $1,500/month for 30 years). While predictable, it is front-loaded with interest.

German System (Constant Principal)

Here, the amount you pay toward the principal is constant every month. Since the interest is calculated on the remaining balance, your total monthly payment starts high and decreases every single month. This saves money on interest but requires higher initial cash flow.

American System (Interest Only)

You pay *only* the interest for the duration of the loan. The principal balance remains untouched until the very end, where it must be paid in one lump sum (balloon payment). This is risky for homeowners but common in investment and construction loans.

Banks love it when you stick to the schedule because they maximize their profit. Here is how you can beat the system:

**Bi-Weekly Payments:** Instead of one monthly payment, make half a payment every two weeks. You'll end up making 13 full payments in a year instead of 12, without feeling the pinch.

**Round Up:** If your payment is $1,145, round it up to $1,200. That extra $55 goes 100% toward principal, compounding your savings over time.

**Windfall Method:** Apply tax refunds, work bonuses, or inheritance money directly to your principal. A single lump sum early in the loan can cut years off the term.

Loan Amortization Calculator: Complete Guide

Understanding how loan amortization works is fundamental to making smart financial decisions. Our free calculator helps you compare different amortization systems and plan your payments effectively.

What is Loan Amortization?

Amortization is the process of gradually paying off a debt through periodic payments. Each monthly payment is divided into two parts: one portion covers the loan interest, and the other reduces the outstanding principal. Understanding this process allows you to visualize how your debt will behave over time and better plan your personal finances.

Amortization Systems: French vs German vs American

There are three main amortization systems, each with unique characteristics:

French System (Constant Payment)

The most common in Europe and the US. You pay the same monthly installment throughout the loan term. Initially, you pay more interest and less principal, but the payment remains constant. It's ideal if you seek stability and predictability in your monthly payments.

German System (Constant Amortization)

In this system, principal amortization is constant each month. Payments are higher at the beginning and gradually decrease. You pay less total interest than with the French system, but it requires greater initial payment capacity.

American System (Interest Only)

During the loan term, you only pay interest. The entire principal is returned at the end in a single payment. It's uncommon for personal loans but used in some commercial mortgages and short-term loans.

How to Use Our Loan Calculator?

Our tool is very easy to use: enter the loan amount, annual interest rate, term in months, and select the amortization system. You'll instantly get your monthly payment, total interest to pay, and a detailed month-by-month amortization table. Plus, you can export results to PDF or CSV to share with your financial advisor or bank.

Tips to Save on Your Loan

An effective strategy to reduce the total cost of your loan is to make early repayments. Our 'Smart Scenarios' module allows you to simulate extra monthly payments and see how much you'd save in interest and how many months you'd reduce the term. Even small additional payments can generate significant long-term savings.

Discover more financial tips on our blog

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Frequently asked questions | AmortiApp