The gradual elimination of a liability, such as a mortgage, in regular payments over a specified period of time. Such payments must be sufficient to cover both principal and interest.
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Amortization (or amortisation; see spelling differences) is paying off an owed amount over time by making planned, incremental payments of principal and interest. To amortize a loan means "to kill it off". In accounting, amortization refers to charging or writing off an intangible asset's cost as an operational expense over its estimated useful life to reduce a company's taxable income.
English
Alternative forms
- amortisation (British)
Etymology
From Middle English amortisen (“to kill, alienate in mortmain”), from Anglo-Norman amorteser, alteration of
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