Understanding how mortgage interest and amortization work helps you see the true cost of a loan and how extra payments save money. Most home loans use a fixed monthly payment: the same amount each month, but the split between principal and interest changes over time.
The annuity formula
The bank calculates your monthly payment so that over the loan term, every payment together pays off the principal plus interest. The formula uses the loan amount, annual interest rate, and number of months. The result is a fixed payment: early on, most of it is interest; later, most of it goes to principal. The Saving.am mortgage calculator uses this same approach.
How extra payments help
When you pay extra (recurring or a lump sum), the extra goes toward principal. That reduces the balance, so future interest is calculated on a smaller amount. You pay less total interest and can pay off the loan sooner. The mortgage calculator lets you add recurring or one-time extras and see the new payoff date and total interest.
PMI in brief
If your down payment is below about 20%, lenders often require PMI (Private Mortgage Insurance). It is a monthly add-on that protects the lender. Once your loan-to-value ratio falls to a set level (e.g. 78%), PMI is usually removed and your monthly payment drops. The calculator shows when that happens.