Amortisation
This is a process that determines monthly mortgage loan payments, in which a certain amount of each payment is applied to the principal and a certain amount to the interest on the loan. The payments may be principal and interest, or interest-only. The monthly amount is based on the schedule for the entire term or length of the loan. Generally speaking, the longer the term of the loan, the more you will be paying in interest during the early years of the loan. Shorter-maturity loans usually shrink the principal of the debt more quickly. Interest-only loans will keep the owner in debt perpetually, as no principal is repaid, but these are sometimes used by investors who have no intention of staying in a home for the long term, but hope to see the value of the property increase.
Interest-only mortgages are not prevalent in more risk-averse countries, such as India. The monthly payments, also called equated monthly installments, have both principal and interest components.
Both interest and principal payments are tax-deductible, up to a certain amount.
