EuroCalc

What is Amortization?

Amortization is the gradual repayment of a loan's principal through scheduled instalments, where each payment covers both interest and a shrinking share of the original balance.

Amortization describes how a loan is paid down over time. Each fixed instalment is split between interest (calculated on the outstanding balance) and principal (the original amount borrowed). Early payments are mostly interest; later payments are mostly principal.

Swiss mortgages are unusual — they are often only partially amortized. Owners must pay down to 65% loan-to-value within 15 years, then the remaining mortgage can roll indefinitely. German, French and Italian mortgages are almost always fully amortized to zero.

An amortization schedule lists every payment, splitting it between interest and principal and showing the remaining balance. It is the clearest way to see how a loan actually unwinds and how much interest you will pay over the life of the loan.

Example

On a EUR 200,000 loan at 3% over 20 years, the first monthly payment of EUR 1,109 contains EUR 500 of interest and EUR 609 of principal. By the final year, almost all of each payment is principal.

Use the calculator

Mortgage Calculator

Estimate monthly payments, total interest and amortization for European mortgages.

Open calculator

Related terms

Frequently asked questions

Why is most of my early payment interest?+

Interest is charged on the remaining balance. At the start, the balance is at its highest, so interest dominates.

Does amortization reduce total interest paid?+

Yes — every CHF of principal repaid earlier shrinks the base on which future interest is calculated.

What is a balloon mortgage?+

A loan with little or no amortization during the term and a large lump-sum repayment at maturity. Common in Switzerland.