Understand Your Mortgage Payment

Learn about the components that make up your mortgage payment and how they affect the amount you pay.

Monthly Mortgage Payment = Principal + Interest + Escrow

Your mortgage payment is comprised of three different parts. 


Principal is the amount of money the bank loaned to you to purchase your home.


Interest is a portion of the overall monthly mortgage payment amount that is calculated based on your interest rate and the remaining principal balance of your loan. 

Generally, you pay more interest than principal at the start of your mortgage loan, because the amount paid in interest is based on the outstanding principal balance at that time. As you pay down the principal balance over the life of your loan, the amount of your monthly payment allocated to prinicpal will increase and the amount allocated to interest will decrease. 

Log in to Online Banking to see your mortgage payments over time. 


M&T collects money for things like property taxes, homeowner's insurance, and Private Mortgage Insurance (PMI)/Mortgage Insurance (MI), and submits these payments on your behalf.  Your loan type determines whether an escrow account is required. 

Read more about Escrow.

Mortgage Loan Interest vs. Personal Loan Interest

Mortgage loans accrue interest differently than personal loans such as auto loans. Here's a quick breakdown:

Mortgage Loan Interest
(also known as Compound Interest)

For a mortgage, interest is calculated and predetermined for each month over the life of your loan.  The amount of monthly interest remains the same, regardless of the day that the payment is posted.

Personal Loan Interest
(also known as Daily Simple Interest)

For personal loans, interest accrues on a daily basis.  The total amount of interest applied (or credited) with each payment is based upon the number of days since your last payment.

Wondering why your mortgage payment has changed?

Depending on your mortgage program, your monthly payments may change over the life of your loan. This most commonly occurs with adjustable rate mortgages (ARMs). After the initial fixed-rate term comes to a close, the interest rate can change up or down depending on market conditions – meaning your monthly payment may rise or fall.

Payments on fixed rate mortgages typically do not change unless you have an escrow account with annual taxes and homeowner’s insurance included in your monthly payments. As your annual property tax and insurance costs change, the amount needed to cover these costs in your monthly payment is impacted. If these costs increase, you can opt to either have your future payments adjusted to cover the difference or pay the difference in full to maintain your current payment. 

Find out more about escrow accounts here.

Still have questions about your mortgage payments?

We're here to help. Check out our frequently asked mortgage payment questions for more information.

Review Payment F A Qs


Take comfort with repayment options.

M&T offers a number of assistance programs across certain mortgages to help you keep up with your payments. Let’s work together to find the right solution for you.