Most amortization calculations are based on Simple Interest or "interest paid on the Principal only". But, if you specifically use the phrase "simple interest amortization", you are implying that negative amortization is not allowed. If you use the term "Simple Interest Mortgage" then that implies something even more specific. You will find at the bottom of this page an Excel template designed for these so-called "Simple Interest Loans".


When you are paying of a loan, the interest that accrues is based on the current loan balance. When you make your payment, you'll be paying both interest and a part of the principal. You can download my amortization schedule to see how this works in a spreadsheet. Assuming your payment is enough to cover the interest, the principal will be reduced and the amount of interest that accrues from that point on is based on the new loan balance (i.e. the new Principal value). In this case, you never pay interest on interest.

So in general, unless you miss a payment or your payment doesn't cover all the interest due, the interest you pay when amortizing a loan is simple interest.

If unpaid interest is added to the Principal, that is called negative amortization, and you would end up paying interest on your unpaid interest (i.e. no longer "simple interest"). For a loan or mortgage to be labeled as "simple interest", the unpaid interest is instead added to a separate account where it accrues (but does not compound) until it is paid off.

Simple Interest Loan Calculator

A so-called Simple Interest Loan or Simple Interest Mortgage is the term used by the mortgage and loan industry to describe a particular type of loan that uses only simple interest calculations (no negative amortization) and accrues interest daily.

The "Mortgage Professor" (Jack Guttentag) has some great articles, "The Nomenclature of Simple Interest Mortgages", "What Are Simple Interest Mortgages?", and "Amortizing a Simple Interest Mortgage" that do a great job of explaining that ...

  1. A so-called "Simple Interest Mortgage" accrues interest daily
  2. Like it's name implies, it is always simple interest
  3. It's a pain in the neck to create an amortization schedule for one.

You can use almost any good mortgage calculator to determine the normal monthly payment and estimate the total interest, and even estimate the effect of making extra payments. But, to use an amortization schedule to track your actual payments is hairy because the interest accrues daily and payments are typically applied the day that the lender receives and processes the payment.

Based on my original loan amortization schedule, I created a version below that includes an interest accrual balance and calculates interest using the date between payments. I've checked this against the Jack Guttentag's spreadsheet that he describes in his article, "Amortizing a Simple Interest Mortgage", but have not used it myself (for an actual simple interest mortgage). If you find it useful, or find a bug, please contact me.


Simple Interest Loan Calculator

for Excel
Simple Interest Loan Calculator
Screenshots: 1
Version: Excel 2003 or later

Template Details

License: Personal Use
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(not for distribution or resale)
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"No installation, no macros - just a simple spreadsheet" - by


Use this spreadsheet to estimate an amortization schedule for a Simple Interest Mortgage. The workbook contains two worksheets. The first is a calculator for determining the effect of payment frequency and extra payments on the total interest.

The second worksheet (shown in the screenshot on the right) is a payment schedule that you can use to track your actual payments.

New in Version 1.1: Added a rounding option, balloon payment option, and the ability to specify the payment instead of just using the estimated (calculated) payment.

A commercial use version of this Simple Interest Loan calculator is included as a bonus spreadsheet when you purchase the Loan Amortization Schedule.

"No Installation, No Macros - Just a simple spreadsheet - An original creation by Dr. Jon Wittwer of"


How to Cite This Page

To link to this page from your website or blog, use a citation similar to the one below.

- Wittwer, J.W., "Simple Interest Loan Calculator", on, Nov 13, 2008

Disclaimer: This spreadsheet and the information on this page is for illustrative and educational purposes only. We do not guarantee the results or the applicability to your unique financial situation. You should seek the advice of qualified professionals regarding financial decisions.

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