Why Mortgage Interest Is Front-Loaded

Chart of a mortgage payment split over 25 years: the interest portion declines while the principal portion rises, crossing at year 11.

Five years into a $500,000 mortgage at 5%, you check your statement. You’ve made about $174,000 in payments, and your balance has dropped by… $57,000. The other $117,000 went to interest. This is the moment most people decide the system is rigged, and I understand why. It looks like the bank loaded all its profit … Read more