The first time I read the amortisation schedule of my mortgage, I went straight to the bottom. Last instalment, 2043. I looked at the "principal" column on the first instalment and then at the last. The first one said €158. The last one €768. I asked myself why. It wasn't a mistake: it was French amortisation, and that's exactly how it works. From that moment on I stopped looking at just the total instalment and started reading how much of each instalment was actually being used to pay down the debt.
French amortisation is the system used in 99% of Italian mortgages. The monthly payment stays the same for the entire life of the loan (with a fixed rate), but its internal composition shifts dramatically over time. At the beginning you are paying almost only interest. Towards the end you are paying almost only principal. Let's see how, and why.
The Logic in One Line
Each month, the bank calculates interest on the outstanding debt at that moment. The higher the debt, the higher the interest. The principal portion of the instalment is what is left after the interest is covered. At the start the debt is at its maximum, so interest eats up most of the instalment. Month by month the debt drops, the interest shrinks, and the principal portion grows.
It is a 17th-century formula, attributed to the French mathematicians who developed it for life annuities. Hence the name "French". The main alternative is "Italian" amortisation, where the principal portion is constant and the instalment falls over time. Almost no Italian bank still offers it, because banks earn less total interest on the Italian model.
The Formulas (with a Step-by-Step Numerical Example)
The constant monthly instalment R is calculated with this formula:
R = C × i / (1 − (1 + i)−n)
Where:
- C = principal financed
- i = annual rate / 12 (monthly periodic rate)
- n = total number of instalments (years × 12)
Let's take the classic case: €150,000 mortgage, 25-year term, TAN 3.50%.
i = 0.035 / 12 = 0.002917
n = 25 × 12 = 300
(1 + i)n = (1.002917)300 ≈ 2.3964
(1 + i)−n = 1 / 2.3964 ≈ 0.4173
R = 150,000 × 0.002917 / (1 − 0.4173) = 437.55 / 0.5827 ≈ €750.90
The instalment will therefore be €750.90 a month, fixed for 300 months.
Now, each month, the interest portion and the principal portion of the instalment are calculated like this:
Interest portion month k = Outstanding debt after instalment k−1 × i
Principal portion month k = R − Interest portion month k
Outstanding debt after instalment k = Outstanding debt after instalment k−1 − Principal portion month k
Let's calculate the first three instalments of our example:
Instalment 1: starting debt 150,000.
Interest = 150,000 × 0.002917 = 437.50
Principal = 750.90 − 437.50 = 313.40
Outstanding debt = 150,000 − 313.40 = 149,686.60
Instalment 2: debt 149,686.60.
Interest = 149,686.60 × 0.002917 = 436.59
Principal = 750.90 − 436.59 = 314.31
Outstanding debt = 149,686.60 − 314.31 = 149,372.29
Instalment 3: debt 149,372.29.
Interest = 149,372.29 × 0.002917 = 435.67
Principal = 750.90 − 435.67 = 315.23
Outstanding debt = 149,057.06
Notice anything? After three €750.90 instalments (€2,252.70 paid in total), the principal repaid is only €942.94. The rest, €1,309.76, has gone to the bank in interest.
Schedule Excerpt: First 12 Months and Last 12 Months
Here is how the same example mortgage behaves in its first and last 12 instalments.
| Inst. no. | Month | Principal | Interest | Outstanding debt |
|---|---|---|---|---|
| 1 | Jan 2026 | €313.40 | €437.50 | €149,686.60 |
| 2 | Feb 2026 | €314.31 | €436.59 | €149,372.29 |
| 3 | Mar 2026 | €315.23 | €435.67 | €149,057.06 |
| 6 | Jun 2026 | €317.99 | €432.91 | €148,103.40 |
| 12 | Dec 2026 | €323.57 | €427.33 | €146,169.75 |
| ... | ||||
| 289 | Jan 2050 | €724.28 | €26.62 | €8,404.12 |
| 295 | Jul 2050 | €737.01 | €13.89 | €4,024.15 |
| 299 | Nov 2050 | €746.55 | €4.35 | €743.20 |
| 300 | Dec 2050 | €748.73 | €2.17 | €0 |
In the first month, 58% of the instalment is interest. In the last month, interest is 0.3%. The instalment is always the same, but its "soul" is flipped.
How Much Interest You Really Pay, in Total
On a €150,000 mortgage over 25 years at TAN 3.50%, by the end of the schedule you will have paid:
Total instalments: 750.90 × 300 = €225,270
Principal repaid: €150,000
Total interest: €75,270
That means the cost of the mortgage, in pure interest, is 50.2% of the principal financed. For every €100 borrowed, you pay back €150.20. Banks don't tell you this with this clarity, but this is what really matters.
Why Knowing the Composition of the Instalment Changes the Way You Manage the Mortgage
Three practical things that follow directly from the formula.
Full early repayment pays off when you have many years left. If you want to close the mortgage after 5 years, you have paid roughly €45,000 in instalments but only repaid €17,000 of principal. You have to give the bank €133,000 to close it. You give back those €133,000 without paying the €30,000 of interest you would have paid in the years to come: that is the real upside of early repayment. The closer you are to the end, the less future interest you save, the less repaying makes sense.
Refinancing pays off even after 10 years. Even halfway through the schedule, if you find a lower rate, you recover on the interest of the remaining instalments. Refinancing is free by law (Bersani 2007), so it is almost always a winning move when the rate gap is at least 0.80–1.00 points.
Paying an instalment in advance (partial amortisation) shifts the schedule. If I pay €5,000 extra today, my outstanding debt drops immediately. From that month on, the interest calculated is lower. I can choose whether to shorten the term (same instalments, fewer months) or to reduce the instalment (same months, lower payment). Banks don't always tell you, but it is your contractual right: read the SECCI.
Criticisms of French Amortisation (and Why They Don't Always Hold Up)
In recent years some Italian rulings have made noise by declaring French amortisation "mathematically non-transparent" because it doesn't spell out the instalment formula in a way that lets the customer reproduce it. The Court of Cassation, joint sections no. 15130/2024, drew a line: a French amortisation schedule is not in itself void, nor does it imply anatocism (interest on interest), provided that the bank has clearly stated the TAN, term, principal and composition of the instalments.
In other words: if your contract contains the four basic parameters (TAN, principal, term, periodicity) and an amortisation schedule attached, it is valid. The court challenges that succeed today involve very specific cases of mortgages without a detailed schedule given to the customer, not the entire category.
Frequently Asked Questions
Is French amortisation anatocism?
No. Cassation 15130/2024 confirmed that the compound capitalisation used in the instalment formula is not equivalent to anatocism, because interest is not calculated on accrued interest but only on the outstanding principal.
What changes with a variable rate?
The logic stays the same, but the instalment is recalculated every time the Euribor changes (typically every 1, 3 or 6 months depending on the indexation). The instalment changes, the principal and interest portions change, but the mathematical formula is the same.
Is there a "break-even point" beyond which it pays to repay early?
As a rough guide, if you have at least 7–8 years of mortgage left and you have cash without higher-yielding investments, full or partial repayment is almost always worthwhile. With less than 5 years remaining, it often pays to keep the mortgage and invest the cash.
Can I see the full schedule before signing?
Yes, that is your right. The PIES (European Standardised Information Sheet) must include the detailed amortisation schedule. If the bank refuses or gives you a 5-line summary, push for the full one: instalment by instalment, month by month.
Is Italian amortisation still possible?
Only on very specific loans (some farm mortgages, "prestiti d'onore"), not on standard retail mortgages. In any case, on the Italian model you pay less total interest but the early instalments are noticeably higher: you need a more solid starting income.
In Short
Understanding French amortisation is not an academic exercise: it is the way to read your mortgage from the inside and make sensible decisions on early repayment, refinancing and partial amortisation. The formulas are simple. The difference between someone who knows them and someone who doesn't, on an average mortgage, is worth a few thousand euros over the life of the loan.
To play with the numbers on your specific case — principal, term, rate you have in mind — you can use our tool to simulate the amortisation schedule: by changing one parameter at a time you immediately see how the composition of the instalments and the total interest shift.
Related reading on mortgages
- Fixed or variable rate in 2026: which pays off with Euribor at 2.165% — if you still have to choose between a fixed and a variable instalment.
- Mortgage spread: how to read it in the SECCI and why different banks offer you a different one — before signing, check how heavy the spread weighs on you.
- First-home mortgage 2026 for under-36s: tax benefits, the Consap fund, mistakes to avoid — if you are under 36 and buying your first home.