Mortgage Amortization Schedule: What and How to Read

When you take out a mortgage, the bank provides a fundamental document: the amortization schedule. This is the table that shows, payment by payment, how the loan will be repaid over time. Understanding how to read it is essential to know how much you will actually pay in interest, how much principal is repaid each month, and whether it makes sense to pay off the mortgage early. In this guide, we cover everything you need to know about the amortization schedule, with practical examples and real numbers.

What is an amortization schedule

The amortization schedule is the repayment plan for the mortgage. For each payment, it shows:

• Payment number: the progression of payments (1, 2, 3... up to the last one)
• Due date: when the payment must be made
• Payment amount: the total amount to be paid
• Principal portion: the part of the payment that reduces the remaining balance
• Interest portion: the part that compensates the bank for the loan
• Remaining balance: the principal still to be repaid after the payment

The key element to understand is that each payment consists of two parts: the principal (which reduces the debt) and the interest (which is the cost of borrowing). The ratio between these two components changes over time, and this change depends on the type of amortization chosen.

French amortization: the most common in Italy

The most widely used amortization method in Italy is the "French" method (or "constant payment" method). Its main characteristic is that the payment amount remains the same throughout the mortgage term (unless there are rate changes in variable-rate mortgages).

However, within the constant payment, the composition changes over time:

• At the beginning of the mortgage, you pay mostly interest and little principal
• At the end of the mortgage, you pay mostly principal and little interest

Practical example: 150,000-euro mortgage

Consider a mortgage with these characteristics:

• Amount: 150,000 euros
• Term: 25 years (300 monthly payments)
• Fixed rate: 3.20% per year (nominal annual rate)

With our amortization schedule calculator, we get a monthly payment of 726.47 euros. Let's see how it is distributed in the first and last payments:

As you can see, at the first payment you pay 400 euros in interest and only 326.47 euros in principal. By payment 150 (after 12.5 years), the ratio has reversed. At payment 300 (the last), almost the entire payment is principal.

Total paid over 25 years: 726.47 × 300 = 217,941 euros, of which 150,000 is principal and 67,941 euros is interest.

The constant payment formula

For those who want to understand the math, the formula for the monthly payment with French amortization is:

R = C × [i × (1+i)^n] / [(1+i)^n - 1]

Where:

• R = monthly payment amount
• C = initial principal (150,000 euros)
• i = monthly rate (3.20% / 12 = 0.2667%)
• n = total number of payments (300)

Italian amortization: decreasing payments

The "Italian" amortization (or "constant principal" method) is less common but has interesting advantages. In this scheme:

• The principal portion is constant in every payment
• The interest portion decreases over time
• Consequently, the total payment decreases over time

Example with the same mortgage

With the same 150,000-euro mortgage at 3.20% over 25 years:

• Fixed principal portion: 150,000 / 300 = 500 euros per month
• First payment: 500 + 400 (interest) = 900 euros
• Last payment: 500 + 1.33 (interest) = 501.33 euros
• Total interest paid: approximately 60,200 euros

The interest savings compared to French amortization is approximately 7,700 euros. The trade-off is a higher initial payment (900 euros versus 726 euros). This is why many families prefer French amortization: the initial payment is more manageable.

How to read the bank's amortization schedule

When you receive the amortization schedule from the bank, verify these elements:

1. The applied rate

Check that the TAN (Nominal Annual Rate) matches what was agreed upon. The TAN is the "pure" rate without ancillary costs. The TAEG (Annual Percentage Rate) instead includes all costs (appraisal, processing, mandatory insurance) and represents the true cost of the mortgage.

2. Consistency of the numbers

Verify that the sum of all principal portions equals the mortgage amount. Verify that the remaining balance at the end is zero. You can quickly do this with our amortization schedule calculator and compare the results with the bank's document.

3. Total interest

Add up all the interest portions to find out how much more you will actually pay beyond the principal. In a 30-year mortgage, the interest can exceed 50% of the borrowed amount.

4. Recurring fees

Some banks charge payment collection fees (1-2 euros per payment) or annual management costs. These costs do not appear in the standard amortization schedule but affect the TAEG.

Fixed rate vs variable rate: impact on the schedule

The type of rate significantly affects the amortization schedule:

Fixed rate

The schedule is final from the day of signing. The payment remains identical for the entire mortgage term. In March 2026, fixed rates for 25-year mortgages are around 2.80%-3.50%, depending on the bank's spread and the applicant's profile.

Variable rate

The schedule is only indicative: it shows payments calculated at the current rate, but these will change at each recalculation (generally quarterly or semi-annually). The variable rate is linked to Euribor (usually 3-month Euribor) plus the bank's spread.

Mixed rate or capped rate

A mixed rate allows switching from fixed to variable (or vice versa) at certain intervals. A capped variable rate has a maximum ceiling beyond which the payment cannot rise, offering protection against rate increases.

Early repayment: how it changes the schedule

If you decide to repay the mortgage early (fully or partially), the amortization schedule is recalculated. Italian law (Legislative Decree 385/1993, Banking Consolidated Act) provides that for primary residence mortgages taken out after February 2, 2007, no penalties can be applied.

With a partial early repayment, you can choose between:

• Reducing the payment: you keep the same term but pay less each month
• Reducing the term: you keep the same payment but finish sooner

Generally, reducing the term is more advantageous because you save more in total interest.

Comparison of different scenarios

Let's see how the numbers change with different terms for a 200,000-euro mortgage at 3.00%:

Going from 15 to 30 years, the payment drops from 1,381 to 843 euros (-39%), but total interest more than doubles: from 48,609 to 103,556 euros. These numbers help you choose the right balance between payment affordability and total mortgage cost.

Common mistakes when reading the schedule

1. Confusing TAN and TAEG: the TAN is the rate used in the amortization schedule, the TAEG is the actual cost including fees. Always compare mortgages using the TAEG.
2. Ignoring total interest: focusing only on the monthly payment without looking at total interest is a costly mistake.
3. Not considering inflation: a payment of 800 euros today will weigh less in 20 years in real terms. This is a point in favor of long-term fixed-rate mortgages.
4. Underestimating ancillary costs: appraisal (200-400 euros), processing fees (0.5-1% of the mortgage), fire and explosion insurance (mandatory), life insurance (optional but often required).

How to generate your amortization schedule

To calculate the complete schedule for your mortgage, use our online amortization schedule calculator. Enter the mortgage amount, term in years, interest rate, and amortization type (French or Italian). You will immediately get the monthly payment, total interest, and the complete payment-by-payment table with principal portions, interest, and remaining balance.

Frequently asked questions

What is the difference between French and Italian amortization?

In French amortization, the payment is constant but the composition changes (more interest at the beginning, more principal at the end). In Italian amortization, the principal portion is constant and the payment decreases over time. French amortization is more common because it has a lower initial payment, but Italian amortization saves on total interest.

Can I renegotiate the mortgage and get a new schedule?

Yes, you can ask your bank for a renegotiation of the mortgage (free of charge) to change the rate, term, or payment amount. Alternatively, you can use mortgage transfer (surroga), moving the mortgage to another bank at no cost. In both cases, a new amortization schedule is generated.

How is the remaining balance calculated?

The remaining balance at payment n equals the remaining balance at payment n-1 minus the principal portion of payment n. At the beginning of the mortgage, the remaining balance equals the financed amount; at the end, it is zero. You can check your current remaining balance on the amortization schedule or by asking the bank.

Does the mortgage payment include insurance costs?

No, the standard amortization schedule shows only principal and interest. Mandatory insurance (fire and explosion) and optional insurance (life, job loss) are charged separately, often on an annual basis. Check the TAEG for the complete picture of costs.

Is it worth extending the mortgage term for a lower payment?

Extending the term reduces the payment but significantly increases total interest. For a 200,000-euro mortgage at 3%, going from 20 to 30 years reduces the payment by 266 euros per month but costs 37,347 euros more in interest. Carefully evaluate the payment-to-income ratio and use the calculator to compare different scenarios.