Capital

• In mortgage terms, the capital also is known as the principal on the loan. The capital, or principal, is the amount borrowed less any amount of the loan paid back.
  
  

Mortgage Payments

• A monthly mortgage payment has two components: the capital component and the interest payment. The capital component will decrease the remaining unpaid portion of the borrowed amount on the loan, while the interest payment is the cost of the mortgage that a borrower must pay back in addition to the amount borrowed.
  
  

Increased Monthly Payments

• When making mortgage payments, a borrower has the option to pay more than the required amount. An increase in a monthly mortgage payment is applied toward paying off the capital on the loan, which will result in less interest owed.
  
  

Ending a Loan

• As soon as the borrower repays all of the borrowed money on the loan through capital payments, the loan will end and no more payments will be necessary. Making additional capital payments will reduce the amount of time that the borrower will need to pay back the mortgage.
  
  

Capital Payments and Amortization Tables

• A mortgage's amortization table will disclose the amount of capital and the amount of interest that the borrower pays with each payment.