Meet the Mortgage Calculator: Your Monthly Payment, Deconstructed

A $400,000 mortgage at 6.5% over 30 years: what's the monthly payment? Most people punch it into a calculator and get $2,528. They stop there. But that $2,528 is hiding something important: in month 1, $2,167 of your $2,528 payment goes to interest. Only $361 goes to principal.

Alistair's Mortgage Calculator shows you the full picture — payment, total cost, and the amortization schedule that reveals exactly how banks profit from your mortgage.

What the Tool Shows

The microtool takes your home price, down payment, interest rate, and term — then computes:

• Monthly payment: Principal + interest (property tax and insurance are separate)
• Total cost of the loan: All payments over the full term
• Total interest paid: The bank's share — often more than the loan amount itself
• Amortization schedule: A month-by-month or year-by-year breakdown of principal vs. interest
• Equity accumulated: How much of the house you actually own at any point

Real Numbers: A $400,000 Home, 20% Down

• Home price: $400,000
• Down payment: 20% ($80,000)
• Loan amount: $320,000
• Interest rate: 6.5%
• Term: 30 years

Monthly payment (P&I): $2,023

Total cost over 30 years: $728,280 ($320,000 principal + $408,280 interest)

That's right: you pay $408,280 in interest to borrow $320,000. The bank more than doubles its money.

The Amortization Story

In year 1, you pay roughly $24,300 in total payments. Of that, about $20,600 is interest and only $3,700 is principal. At the end of year 1, you still owe $316,300 — you've barely made a dent.

It takes until year 18 for the principal portion of your monthly payment to exceed the interest portion. For the first 17 years, more than half of every payment goes to the bank's bottom line.

By year 30, your final payment is roughly $2,023 — but now $2,012 of it is principal and just $11 is interest. The mortgage is almost done, and nearly every dollar you pay builds equity.

This is why extra payments early in the mortgage matter so much. An extra $200/month starting in year 1 saves roughly $85,000 in interest over the life of the loan and pays it off 7 years early. The same $200/month starting in year 15 saves only about $8,000.

What Happens at Different Rates

• At 3% (refi boom rates): $320,000 loan → $1,349/month → $485,640 total → $165,640 interest
• At 6.5% (current): $320,000 loan → $2,023/month → $728,280 total → $408,280 interest
• At 8% (historical average): $320,000 loan → $2,348/month → $845,280 total → $525,280 interest

The difference between 3% and 6.5% over 30 years: $242,640 in extra interest. That's real money — and it explains why the rate matters more than the price for most buyers.

Why Transparency Matters

Lenders show you a monthly payment. They don't highlight that 85% of your first year's payments go to interest. They don't emphasize that a 1% difference in rate is worth tens of thousands over the life of the loan. That's your job to understand.

Alistair lays it all out: every payment, every year, every dollar of interest. Because you can't optimize what you don't see.

That's what this microtool does. Know what your mortgage actually costs before you sign.