Amortizing loan — monthly payment
With an amortizing (annuity) loan you pay the same amount every month — the so-called annuity. This payment consists of two parts: the interest portion and the principal portion. At the start of the term, the remaining balance is high, so the interest portion is large and only a small part of the payment reduces the principal. With every payment, the outstanding balance decreases — and so does the interest portion. The principal portion grows in the same proportion because the total payment stays constant. At the end of the term, the loan is fully repaid. The key advantage: you have a predictable, constant monthly burden over the full term — ideal for household budgeting and mortgage planning.
The classic annuity formula reads:
A = K · (q^n · (q − 1)) / (q^n − 1)M = P · i / (1 − (1 + i)^−n)Let's say you take out an amortizing loan of 200,000 at a nominal rate of 3.5% p.a. with a term of 25 years. Then:
P = 200,000
i = 3.5% / 12 = 0.002917 (monthly)
n = 25 · 12 = 300 months
Plug into the formula:
M = 200,000 · 0.002917 / (1 − (1.002917)^−300) ≈ 1,001.25Nominal interest rate (sollzins / rate of interest): The pure interest rate at which the outstanding balance is charged per year. This is the rate prominently advertised by banks.
Effective annual interest rate (APR / effective rate): In addition to the nominal rate, the effective rate includes all other mandatory costs — e.g. processing fees, discount, sometimes credit insurance. When comparing loan offers, always look at the effective rate — it is the decisive metric.
Remaining balance (principal balance): The amount of the loan that has not yet been repaid at a given point in time. It decreases with every payment. For mortgages, the remaining balance at the end of the fixed-rate period is often crucial because it determines the follow-up financing.
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In this simple version, the calculator only uses the classic annuity formula without extra principal payments. An extended amortization schedule with annual extra payments is planned as a future feature. For a rough estimate, you can shorten the term and observe how much the interest cost drops — an extra principal payment effectively works like shortening the term.
When the fixed-rate period ends, the loan is usually not yet fully repaid — a remaining balance is left. For this amount you need follow-up financing: either with the same bank (rollover) or with a different bank (refinancing). You can lock in rates as early as 1-5 years before the end of the fixed period using a forward loan if you expect rates to rise. Important: in many countries (e.g. Germany under § 489 BGB), after 10 years of the contract you have a free statutory right of early termination.
With an annuity loan, the monthly payment stays constant — the interest portion is large at the start, then principal dominates. With a fixed-principal loan (also called linear loan), the principal portion stays constant and the interest portion drops as the balance shrinks. So the payment starts higher and decreases over time. Over the entire term, a fixed-principal loan usually pays less total interest because the balance falls faster — but the initial burden is higher. Annuity loans are much more common in most countries because the constant payment provides planning certainty.
No. This calculator only provides a mathematical calculation based on your inputs and is not a substitute for individual financial or investment advice. For concrete loan decisions — especially mortgages — you should consult an independent financial advisor, your bank, or a consumer protection agency. Tax implications, personal risks (job loss, illness), insurance, and individual contract terms are not considered here.
The nominal rate is the marketing price — the effective annual rate (APR) is the real price. The EU Consumer Credit Directive 2008/48/EC requires banks to disclose the APR using a uniform formula that includes processing fees, account maintenance, and mandatory payment protection insurance alongside the nominal rate. Practical consequence: a loan advertised at 4.5% nominal can easily rise to 6% APR through a 2% processing fee plus optional payment-protection insurance — comparisons should always use the APR, never the nominal rate.
Mortgages add a second often-overlooked lever: the fixed-rate period. Someone signing a 25-year loan in 2025 at 4% with only a 5-year fixed period risks follow-on financing at far worse conditions — if the rate jumps to 7% in 2030, the monthly payment on a 180,000 EUR residual balance rises by about 350 EUR. Longer fixed periods (15 to 20 years) cost slightly more in nominal rate today but lock in planning certainty. Tip: an initial repayment rate of at least 2% per year shortens the term dramatically vs. 1% — on a 200,000 EUR loan at 4%, 1% repayment runs about 40 years, 2% only about 27 years.
The figures below are annuity loans — constant monthly payment for the full term.
The calculator assumes a constant fixed interest rate over the entire term — but for German mortgages the fixed period is usually capped at 5, 10, 15 or 20 years. After that, follow-on financing applies at then-current market rates, which can materially change the effective rate over the full term. Extra repayments, payment-protection insurance, processing and appraisal fees, and standby interest are not modelled. For variable-rate loans or bullet/balloon loans this calculator is unsuitable as they follow different repayment logic. For a binding financing commitment always verify the bank's original conditions and ideally involve an independent financial advisor (consumer association or fee-only advisor). This page is informational, not financial or loan advice.
This calculator is intended for informational orientation only and does not replace professional financial advice. The actual conditions, fees, and effective interest rates from your bank may differ from the values calculated here. Before signing a loan contract, you should always consult an independent financial advisor, your bank advisor, or a consumer protection agency. The results are not legally binding and do not constitute a recommendation.