Amortization schedule
A schedule detailing, for each installment, the principal portion, the interest portion, the outstanding balance and the insurance premium. It makes the loan's mechanics visible and underpins early-repayment or renegotiation simulations. Every borrower receives this document with their offer.
Key points
- Contractual document provided with the loan offer, detailing each installment line by line.
- Column by column: installment number, date, payment, interest, principal repaid, outstanding balance, insurance.
- Forms the basis for calculating early-repayment penalties at any given date.
- On a variable rate, the schedule is indicative and recalculated at each revision.
Frequently asked questions
What is the amortization schedule concretely used for by a borrower?
It lets the borrower know at any point how much remains to be repaid, what interest has already been paid, and what an early repayment at a specific date would cost. It is also a tax tool: for a rental investment, the interest shown in the schedule may be deducted from rental income. Finally, it serves as a reference in any dispute with the bank over contract application.
How do you read a line of an amortization schedule?
Each line corresponds to one installment. The 'interest' column is the annual rate divided by 12 applied to the outstanding balance from the previous line. The 'principal repaid' column is the difference between the total installment and this interest. The 'outstanding balance' is the previous balance minus the principal repaid. The first lines show interest dominating heavily; the last lines show principal amortising quickly.
Why is the amortization schedule 'indicative' for a variable rate?
With a variable rate, the installment or term changes at each revision according to the new reference index. The initial schedule can therefore only represent with certainty the scenario based on the rate at the time the offer was issued. The bank recalculates and provides a revised schedule after each change, but the borrower must understand that future lines are projections, not firm commitments.
In practice
A broker uses a client's amortization schedule to show that, at the 60th installment of a 20-year loan, the outstanding balance is still €148,000 out of €180,000 borrowed: key information for simulating the impact of a partial early repayment at that stage.
Official sources
- The annual percentage rate (APRC) · Service-Public.gouv.fr
- Mortgage credit (official guide) · Service-Public.gouv.fr