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Where your payment actually goes

The instalment is a constant number, which conceals something important: its composition changes dramatically over the life of the loan. Interest is charged each month on the outstanding balance, and at the start the balance is at its maximum, so the great majority of your early payments is interest and only a sliver reduces the debt. As the principal slowly falls, the interest charged falls with it, so more of each fixed payment goes to principal — and the process accelerates. On a typical twenty-five-year mortgage, borrowers are frequently dismayed to find that after five years of faithful payments they have repaid only a small fraction of what they borrowed. Nothing has gone wrong; that is simply the shape of amortisation, and it is the reason early overpayments are so unusually powerful.

The number the lender does not lead with

Lenders advertise the monthly payment, because it is the number that determines whether you feel you can afford the loan. It is not the number that tells you what the loan costs. Stretching a loan from fifteen years to thirty will visibly reduce the monthly figure and can easily more than double the total interest — you are paying less each month for twice as long, on a balance that shrinks far more slowly. The comparison worth making is not between monthly payments but between total repayments: principal plus every rupee, pound or dollar of interest, across the whole term. That single figure reframes the decision, and it is precisely why it appears in the small print rather than in the headline.