how much principle is typically paid as a percentage on a traditional 30 year fixed mortgage in the first ?

Question

How much is paid within the first 3,5 and 10 years and thereafter in relation to interest?Does it differ from lender to lender? I have heard things like 80%interest/ 20% principal and I have also heard that you are paying mostly interest for the first 10 years? Can someone please let me know what is the real deal.

Answer 1

During the earliest part of a loan most of your payments are towards interest. To answer your question on a $100k loan with a 30 yr fixed @ 6.5% your balance after
first year is 98,882
three years is 96,417
five years is 94,246
ten years is 84,776

As far as I know this is the normal procedure in a standard loan. To break it down on a percentage basis is around 632.07 total payment 90.40 principal = 14.30% toward principal for the first month. The percentage gets higher as the loan balance goes down.

Answer 2

This is a basic math question, so you can calculate the the exact amount of principle and interest for a loan at any point in time of the loan. There are no general "rules", just the math calculations. To do the calcs you could look at amoritiztion tables, calculate a loan in Excel, or use business calculator.
As the interest rate goes up the principle paid in the early stages of the loan declines. Here are some numbers, 360 month loan.
Principle Paid as percent of original balance.
Rate 6.5% 10%
Year
1 1.0% 0.5%
3 3.4% 1.7%
5 6.2% 3.3%

Answer 3

Your payment is calculated as a function of the amount you need to pay to pay off both the principal and the interest you would owe on that borrowed money for the period in question.

Yes...in your earliest payments, the interest portion would be greater than 80 percent of the payment amount. This tapers down over time and the Principal amount applied goes up.

Keep in mind that the interest is the amount you are paying to borrow over time and your earliest payments include the interest for borrowing the full principal amount for the 30 days prior to your payment. The next payment includes interest on what is left of the principal (after the small amount deducted from principal on the first payment), and so on. There is always an interest payment. The interest payment amount declines gradually as the amount of principal you are paying it on declines.

You can get a lot of information from the following two sources.

Answer 4

I depends on the interest rate Obviously you would pay more interest on a 10% loan than on a 5% loan. On a $100,000 10% loan you would pay 877.57per month for 30 years and on the same loan at 5% you would pay $ 536.62 per month.
First year interest on the 10% loan would be 9974.98 and principal would be 555.86. The principal would increase to 614.07 the second year and the interest would decrease.

On the 5% loan the interest would be $ 4966.50 and the principal would be $ 1475.34--second year: Int = 4891.01 & P = 1550.83

Taxxcpa http://wwwtaxman.blogspot.com

Answer 5

That is the beauty (for the lender) of compound interest.

You owe more in the first few years, than you do in the last few, so you pay more interest upfront.

You can counterbalance it a little by sending in more than the minimum payment, as long as your lender allows for no penalties for early re-payment.