Legal Definitions - amortized mortgage

An amortized mortgage is a type of mortgage where the borrower makes periodic payments that include both interest and a portion of the principal. By the end of the mortgage term, the borrower will have completely repaid the loan. This type of mortgage is also known as a self-liquidating mortgage.

For example, if a borrower takes out a 30-year amortized mortgage for $200,000 at a fixed interest rate of 4%, their monthly payment would be $955. The payment includes both interest and a portion of the principal, so over time, the borrower's equity in the property increases as the loan balance decreases.

Amortized mortgages are the most common type of mortgage used for home financing. They provide borrowers with a predictable payment schedule and a clear path to full repayment of the loan.