Amortization Schedules

When you are repaying an amortized loan such as a mortgage and an installment loan, it is often necessary to calculate the amount of interest you have paid in a given period, for tax reasons, or the remaining balance on the loan in the event that you want to refinance it or borrow against the equity. Calculating an amortization schedule without a computer or a specialized calculator is tedious and time-consuming but is relatively straightforward. You merely calculate the interest for the first period, subtract that from the amount of the payment, and the difference is amortization which reduces the principal. A simple example will show how it is done.