Amortization is an important aspect of mortgage loans. It involves the gradual repayment of the loan through regular monthly payments. Each payment consists of both principal and interest components. The process allows borrowers to spread out the cost of their loan over a specific period, or outline the payment breakdown between and interest for each installment. In the early stages of the loan, the interest portion is higher, while the principal portion increases over time. Through amortization borrowers steadily reduce their outstanding loan until it is fully repaid.
