Amortization
Paying down a loan through fixed payments on a schedule, where early payments are mostly interest and later payments are mostly principal.
By Findley's Finance · Last reviewed: September 2026
Why it matters
Amortization is why a mortgage feels like treading water for years: on a 30-year loan, the first payments barely dent the balance because interest is charged on the full amount owed. Every payment shifts the split slightly toward principal. Understanding the schedule kills the illusion that minimum payments make fast progress — and shows why extra principal payments early save a fortune in interest.
Concrete example
On a $300,000 mortgage at 6.5% (~$1,896/month), the first payment is about $1,625 interest and only $271 principal.