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On a 30-year loan, the bank gets paid first. See exactly how much.
A $320,000 loan at 6.5% for 30 years costs $2,022.62 a month — and $408,142 in interest, more than the loan itself, with 79% of your first year's payments going to interest. This calculator shows the payment, the lifetime cost, and why early extra payments hit so hard.
Borrowers use it before signing: $320k at 6.5% is $2,022.62/mo and $408,142 of interest — 79% of year one is the bank's money, not yours.
The formula is P × i / (1 − (1 + i)^(−n)), where P is principal, i is the monthly rate (annual ÷ 12), and n is the number of payments. For $320,000 at 6.5% over 30 years: monthly rate 0.5417%, 360 payments, giving $2,022.62. Each payment first covers that month's interest on the remaining balance; the rest reduces principal. Because early balances are large, early payments are mostly interest — in year one of this loan, about $1,600 of each $2,023 payment is interest. The schedule "amortizes" — kills the loan slowly at first, then accelerating as the balance shrinks.
Interest is charged monthly on the outstanding balance, and the balance is never bigger than at the start — so interest is never bigger either. At 6.5% on $320,000, month one's interest charge alone is $1,733; your $2,023 payment reduces principal by only $289. This front-loading is why extra principal early is so powerful: an extra $289 in month one saves that dollar's interest for the remaining 359 months. It is also why refinancing late in a loan rarely helps — by year 20 of a 30-year mortgage, most of each payment is finally principal, and restarting the clock restarts the interest-heavy phase.
On $320,000 at 6.5% for 30 years, one extra payment of $2,023 applied annually — or equivalently, paying $2,191 monthly — cuts the term by roughly 5 years and saves about $75,000 in interest. Biweekly payment plans exploit the same math: 26 half-payments equal 13 full payments a year. The mechanism is simple — every extra dollar of principal stops accruing interest for every remaining month — but the effect is largest early and shrinks as the balance falls. Check for prepayment penalties (rare on modern mortgages, common on some auto and personal loans) before sending extra.