Plants & Flowers
When considering a **home loan** or **mortgage**, it’s crucial to understand the principal and interest components of your monthly payment. The **principal** is the actual amount of money you borrowed to purchase your home. **Interest** is the cost of borrowing that money, calculated as a percentage of the remaining principal balance. Each month, your payment is divided between paying down the principal and covering the interest. Early in your loan term, a larger portion of your payment often goes towards interest, gradually shifting to more principal as the loan matures. This repayment structure, where regular payments gradually reduce both the loan amount and the borrowing cost, is fundamental to how **mortgages** work.
