What is mortgage amortization?

Mortgage amortization is the process of paying off a loan through regular payments over a set term. Each payment covers the interest that has accrued since the last payment, with the remainder reducing the principal (the amount you borrowed). Early in the loan most of each payment goes to interest; as the balance falls, more goes to principal. By the final payment, almost all of it is principal. A standard NZ home loan is fully amortizing, meaning the balance reaches zero at the end of the agreed term.

How is my mortgage repayment amount calculated?

Your regular repayment is calculated using the standard annuity formula: M = P x [r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal, r is the interest rate per payment period (annual rate divided by the number of payments per year), and n is the total number of payments over the loan term. For example, a $600,000 loan at 6.5% per year repaid monthly over 30 years gives r = 0.065/12 = 0.005417 and n = 360 payments. The monthly repayment works out to $3,792.41.

How much interest will I pay over my mortgage term?

The total interest on a mortgage equals the total of all repayments minus the original loan amount. For a $600,000 loan at 6.5% over 30 years with monthly repayments of $3,792.41, the total repaid is $1,365,267 and the total interest is $765,267. You can reduce total interest by making extra repayments or choosing a shorter loan term. Switching to fortnightly repayments lowers total interest slightly because interest is charged and repaid more often, but on its own it does not shorten the term or add an extra annual payment. Use the extra repayment fields in this calculator to see the savings.

Mortgage Amortization Calculator

See exactly how your NZ home loan repayments split between principal and interest over time. Enter your loan details below to generate a full amortization schedule, showing your running balance, total interest cost, and how quickly your equity builds.

You can view the schedule by year (summary) or by each individual payment period. The formula used is the standard annuity repayment formula, the same method used by NZ banks.

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Updated June 2026 Standard annuity amortization formula. Applies to principal-and-interest (P&I) NZ home loans.

1. Loan Details

Loan amount

Annual interest rate (%)

Loan term

Repayment frequency

2. Extra Repayments (optional)

Extra repayment per period (on top of regular)

Lump sum extra payment

Lump sum paid after year

Schedule view

Your Mortgage Summary

Regular Repayment

per month

Total Interest Paid
-
over loan term

Total Repaid

principal + interest

Actual Term

with extra repayments

Loan Summary

Loan amount-

Annual interest rate-

Loan term-

Repayment frequency-

Regular repayment-

Extra per period-

Total repaid-

Interest Breakdown

Total principal-

Total interest-

Interest as % of principal-

Interest in first year-

Interest in final year-

Lump sum saving-

Effective interest rate-

Summary: Enter your loan details above.

Amortization Schedule

Period	Opening Balance	Repayment	Principal	Interest	Closing Balance	Cumulative Interest

How Mortgage Amortization Works

When you take out a principal-and-interest home loan in New Zealand, your lender calculates a fixed regular repayment that will pay off the entire balance (including all interest) by the end of your agreed term. This process of gradually paying off a debt through regular payments is called amortization.

Each repayment covers two things: the interest that has accrued since your last payment, and a portion of the principal. In the early years, most of each payment goes toward interest because the balance is large. As you pay down the principal, less interest accrues each period, so more of each payment goes toward principal. By the final payment, almost the entire amount is principal.

The Amortization Formula

The standard repayment formula for a fully amortizing loan is:

Variable	Meaning
M = P x [r(1+r)^n] / [(1+r)^n - 1]	The annuity repayment formula
P	Principal (amount borrowed)
r	Periodic interest rate (annual rate / payments per year)
n	Total number of payments (years x payments per year)

For example, a $600,000 loan at 6.5% per annum repaid monthly over 30 years gives r = 0.065 / 12 = 0.005417 and n = 360. The monthly repayment is $3,792.41. Over 30 years you pay back $1,365,266.93 in total, of which $765,266.93 is interest.

Worked Example with Default Inputs

Item	Value
Loan amount	$600,000
Annual interest rate	6.5%
Term	30 years (360 monthly payments)
Monthly repayment	$3,792.41
Total repaid	$1,365,266.93
Total interest	$765,266.93
Interest as % of principal	127.5%
Interest in month 1	$3,250.00 (principal: $542.41)
Interest in month 360	$20.43 (principal: $3,771.98)

How Extra Repayments Reduce Interest

Making extra repayments, even small ones, reduces your loan balance faster. Because interest is calculated on the outstanding balance, a lower balance means less interest accrues each period. This shortens your loan term and significantly reduces the total interest you pay. For example, paying an extra $200 per month on a $600,000 loan at 6.5% saves roughly $120,000 in interest and cuts the term by about four years.

A lump sum payment works in the same way: it directly reduces your principal on the day it is made, and every subsequent payment then accrues less interest than it would have otherwise.

Fortnightly vs Monthly Repayments

Choosing fortnightly repayments (26 per year) rather than monthly (12 per year) changes how often interest is charged and repaid. This calculator amortizes a fortnightly loan over the same term you select: it uses a periodic rate of the annual rate divided by 26 and a total of your term in years multiplied by 26 payments. Because interest is calculated and paid down more often, the total interest is marginally lower than the monthly equivalent, but the term stays the same and no extra 13th payment is created.

Some lenders offer an accelerated fortnightly option, where the fortnightly payment is set at exactly half the monthly amount. That does add the equivalent of one extra monthly payment each year and can shorten the term. This calculator uses a standard fortnightly schedule rather than the accelerated version, so to genuinely shorten your term here, use the extra repayment field to pay more than the scheduled amount each period.

Related Calculators

Mortgage Calculators: the full hub of NZ home loan tools.
Mortgage Repayment Calculator: calculate your regular payment amount quickly.
Mortgage Extra Repayment Calculator: see how extra payments cut your term and interest.
Mortgage Lump Sum Impact Calculator: the effect of a one-off lump sum payment.
Mortgage Amortisation Schedule: detailed period-by-period payment schedule.

Method: Standard annuity repayment formula M = P x [r(1+r)^n] / [(1+r)^n - 1], where r is the periodic interest rate and n is the total number of payments. Interest per period = opening balance x periodic rate. Principal per period = repayment minus interest. Schedule terminates when the balance reaches zero (final period adjusted for rounding). This matches the method used by New Zealand banks for standard principal-and-interest home loans.

This calculator provides indicative estimates for educational purposes. It assumes a fixed interest rate for the full term. NZ mortgages are typically refixed at shorter intervals (one to five years), so your actual interest cost will vary as rates change. Consult your bank or a licensed mortgage adviser for advice specific to your circumstances.