An amortized loan is a type of loan with scheduled, periodic payments that are applied to both the loan's principal amount and the interest accrued. An amortized loan payment first pays off the relevant interest expense for the period, after which the remainder of the payment is put toward reducing the principal amount.
How does an amortized loan payment work?
An amortized loan payment first pays off the interest expense for the period; any remaining amount is put towards reducing the principal amount. As the interest portion of the payments for an amortization loan decreases, the principal portion increases.
What is a mortgage amortization schedule?
A mortgage amortization schedule is a table that lists each monthly payment from the time you start repaying the loan until the loan matures, or is paid off. The amortization schedule details how much will go toward each component of your mortgage payment — principal or interest — at various times throughout the loan term.
