(or amortisation) is the process of decreasing, or accounting for, an amount
over a period. The word comes from Middle English amortisen to kill,
alienate in mortmain, from Anglo-French amorteser, alteration of amortir,
from Vulgar Latin admortire to kill, from Latin ad- + mort-, mors death.
When used in the context of a
home purchase, mortgage amortization is the process by which your loan principal
decreases over the life of your loan. With each mortgage payment that you
make, a portion of your payment is applied towards reducing your principal
and another portion of your payment is applied towards paying the interest
on the loan.
An Amortization table shows this ratio of principal and
interest and demonstrates how your loan's principal amount decreases over
Amortization is generally known as depreciation of intangible assets of a
You can download the free Mortgage Amortization Schedule calculator