For a long-term loan at a positive rate, early payments may be mostly interest. The split depends on the rate, balance and repayment term; a zero-rate loan has no interest.
What is amortization?
Amortization is the process of paying off a loan through scheduled payments over time. Each monthly payment covers the interest owed for that month plus a portion of the principal. The balance between those two shifts every month.
Why you pay mostly interest at first
Your interest charge each month is calculated on your remaining balance. At the start, your balance is at its highest — so your interest charge is at its highest. As you pay down the balance, less interest accrues, and more of each payment goes to principal.
The total cost of a 30-year loan
Using the unrounded payment, total scheduled P&I is $838,281.14 and interest is $488,281.14. Do not multiply the whole-dollar display by 360: that creates a $158.86 rounding error. A servicer rounding each payment to cents may adjust the final payment; actual servicing can also use different interest conventions.
How extra payments help so much
An extra principal payment correctly applied under the contract reduces the interest-bearing balance in the model. Interest and time avoided depend on rate, remaining term, amount and application date; a chosen $100–$200 amount does not promise years saved or a particular dollar saving. At a zero interest rate, no interest is avoided.
Ask your servicer to confirm that extra payments are applied to principal. Specify "apply to principal" when making additional payments.