Amortisation

Amortisation is the process of repaying a debt through regular, scheduled payments over a fixed period. Each payment is split between reducing the principal (the original amount borrowed) and paying interest on the remaining balance.

Early in the schedule, a larger portion of each payment goes toward interest, while more goes toward the principal as the balance decreases over time. By the end of the loan term, the debt is fully paid off.

Amortisation commonly applies to loans such as mortgages, personal loans, and car loans. In accounting, amortisation can also refer to gradually writing off the value of intangible assets like goodwill, trademarks, or patents over their useful life.