Amortisation

Amortisation definition

/əmɔːtʌɪˈzeɪʃ(ə)n/

What does Amortisation mean?

In the context of lending, amortisation refers to the principal amount of the debt being repaid in instalments over the life of the loan. It can be contrasted with a bullet repayment where the principal is paid in one instalment at the end of the life of the loan.

Amortisation explained

The repayments in an amortising loan are often split into equal amounts, payable at regular intervals. Alternatively, the final instalment may be larger than the rest (known as a 'balloon repayment'). Another possibility is for instalments to follow the borrower’s expected seasonal variations in cashflow.

Variances

Amortization

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