Amortization

usgb/ˌæmərtəˈzeɪʃn/
noun

In finance, the process of gradually paying off a debt.

The homeowners set up a 30-year amortization schedule for their mortgage.
Visual representation of "amortization" - In finance, the process of gradually paying off a debt.

Often appears as...

  • amortization schedule
  • amortization period

Usage tips

Technical

Definition 1 of 4
Visual representation of "amortization"
LampPro Tip 1/2

Long-Term Commitment

Amortization usually means paying off a loan over years, such as a home mortgage.

Illustration for Long-Term Commitment
They chose a 15-year mortgage to speed up the amortization.
LampPro Tip 2/2

Interest Impact

Early payments mostly cover interest, not the principal loan amount.

Illustration for Interest Impact
At first, the amortization schedule showed a small reduction in principal.
Visual representation of the word "Amortization"

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