Publisher: WM STUDIOS. Last updated: 21 August 2026. This page describes a calculation mechanism and the applicable French law. It is neither lending advice nor financial planning advice.
Every payment splits in two
A fixed payment loan is repaid according to a plan known in advance, the amortisation schedule. Each instalment is split in two: the interest, which pays for the money you still owe, and the principal, which actually reduces your debt.
The payment itself stays the same. What changes is the proportion between the two parts, and the mechanism is straightforward: the interest on an instalment is computed on the outstanding principal at that moment. As that balance falls, the interest share falls with it, and the principal share grows by the same amount.
What that looks like, with numbers
Take a 200,000 € loan over 20 years at 3.50 %. The monthly payment works out at 1,159.92 €. Here are four instalments from the schedule.
| Instalment | Interest | Principal | Outstanding principal after |
|---|---|---|---|
| 1st | 583.33 € | 576.59 € | 199,423.41 € |
| 2nd | 581.65 € | 578.27 € | 198,845.15 € |
| 120th (10 years) | 344.50 € | 815.42 € | 117,298.81 € |
| 240th (last) | 3.37 € | 1,156.55 € | 0.00 € |
Look at the first row: more than half of the first payment goes to interest. By the last instalment, interest is down to 3.37 € out of 1,159.92 €. Between the two, the shift is gradual and never abrupt.
Halfway through, you have not repaid half
This is the least intuitive consequence of the mechanism, and the one that surprises people most when they come to sell or refinance.
| After | Principal repaid | Share of the loan | Outstanding principal |
|---|---|---|---|
| 5 years | 37,746.85 € | 18.9 % | 162,253.15 € |
| 10 years (halfway) | 82,701.19 € | 41.4 % | 117,298.81 € |
| 20 years | 200,000.00 € | 100 % | 0.00 € |
Half the term elapsed therefore does not mean half the debt extinguished, but roughly 41 %. A quarter of the term clears only 19 %. Over the full life of the loan, interest totals 78,380.66 €, or 39.2 % of the amount borrowed.
The two formulas, if you want to recompute
The payment on a fixed rate loan follows from the amount borrowed, the periodic rate and the number of instalments. Writing C for the principal, i for the monthly rate (the annual rate divided by twelve) and n for the number of payments:
payment = C × i / (1 − (1 + i)−n)
And the outstanding principal, writing r for the number of payments still to come, follows from the payment:
outstanding principal = payment × (1 − (1 + i)−r) / i
That second formula is the only one that matters for tracking wealth: this amount, and not the sum of the instalments still to come, is your real debt. The point is developed in the page on calculating net worth.
What the schedule does not include
What actually leaves your account each month is often more than the scheduled payment, and the difference amortises nothing.
Borrower's insurance is added to the instalment but does not reduce the principal by a single cent. It covers a risk; it does not repay a debt. Confusing it with the payment leads to overestimating how fast the loan is being cleared.
Arrangement fees and the cost of the guarantee (a surety or a mortgage charge) are paid up front. They make the credit more expensive without appearing in the schedule.
This is also why two rates circulate. The nominal rate is what builds the amortisation schedule. The annual percentage rate additionally includes compulsory insurance, fees and the guarantee: it measures the real cost of the credit, but it is not used to compute the instalments.
Where the schedule is different
Everything above assumes a conventional fixed rate loan with constant payments. Four arrangements fall outside it.
Variable or reviewable rates. The schedule only holds until the next review. A tracker therefore cannot rely on a plan drawn up once and for all: the outstanding principal has to be read from the lender's statement.
Interest only loans. You pay interest alone for the whole term and repay the principal in one go at maturity. The outstanding principal therefore stays equal to the amount borrowed until the very last day, which changes the reading of net worth entirely.
Deferred amortisation. Common for off plan purchases or building works. During the deferral no principal is repaid, and if the deferral is total the interest itself is capitalised, so the debt grows before it starts to fall.
Stepped loans and payment modulation. Several loans secured on the same property, or a payment deliberately varied along the way, produce as many schedules as there are lines. Each has its own outstanding principal, and it is their sum that belongs in the liability side.
Early repayment: what French law says
Repaying all or part of the principal ahead of schedule removes the corresponding future interest, since it was paying for capital that is no longer owed. The lender may however charge an indemnity, and that indemnity is capped.
Article R313-25 of the French Consumer Code sets a double cap for a residential mortgage: the indemnity may not exceed six months of interest on the capital repaid at the loan's average rate, nor 3 % of the outstanding principal before repayment. The lower of the two amounts applies.
On our example, after five years the outstanding principal is 162,253.15 €. Settling it in full:
| Statutory cap | Calculation | Amount |
|---|---|---|
| 3 % of outstanding principal | 162,253.15 × 3 % | 4,867.59 € |
| 6 months of interest at the loan rate | 162,253.15 × 3.50 % ÷ 2 | 2,839.43 € |
| Indemnity applicable | the lower of the two | 2,839.43 € |
These are caps, not amounts due: a contract may provide for less, or for nothing. The exact terms are in your loan offer, and the law exempts certain circumstances from any indemnity at all.
Where to find this calculation in PulseMyPortfolio
You declare a loan with its amount, rate, term and start date. The application derives the outstanding principal as of today, keeps it updated over time, and deducts it from your assets to establish net worth. Several loans can sit side by side, each with its own amortisation.
The application describes your situation; it does not tell you what to do about it. It recommends no early repayment, no renegotiation, no trade off. Every calculation runs on your device.
Sources
- French Consumer Code, article R313-25 (cap on the early repayment indemnity), in French.
- French Consumer Code, articles L313-47 to L313-49 (early repayment, general provisions), in French.
Every amount on this page is computed on a conventional constant payment amortisation: 200,000 € over 20 years at a 3.50 % nominal rate, excluding insurance and fees. Rounding may differ from your lender's by a few cents depending on its calculation convention.
Further reading
The page on calculating net worth shows where this outstanding principal fits, and the gap created by confusing it with the remaining payments. The frequently asked questions cover how the application works.