# amortization

/ˌæmɝtɪˈzeɪʃən/ (US)

Source: https://englishreference.com/word/amortization
Updated: 2026-08-27

## Senses

### 1. paying off a loan

noun · CEFR C1 · Technical

the process of paying off a debt (like a mortgage) in regular parts over a set period of time.

For teachers: the systematic reduction of a loan principal through a series of scheduled payments over a specified duration.

- The bank provided an amortization schedule showing how much interest we would pay each month.
- The mortgage agreement includes a thirty-year amortization period, ensuring that the principal is fully retired by the end of the term.

Usage: Often used with 'schedule' or 'period' to describe the timeline of debt repayment.

### 2. spreading asset costs

noun · CEFR C1 · Technical

spreading the cost of a business asset (like a patent or software) over the years it is used.

For teachers: the accounting practice of spreading the cost of an intangible asset over its projected useful life.

- The company recorded the amortization of its new software patent over five years.
- While physical goods undergo depreciation, the firm must account for the amortization of its intellectual property rights to reflect their declining value.

Teaching tip: Learners should note that 'amortization' is used for intangible assets (like patents), while 'depreciation' is used for physical assets (like machinery).

## Examples

- The monthly amortization of the mortgage includes both interest and principal.
- The company uses straight-line amortization to spread the cost of its new software across five years.
- By calculating the amortization schedule, the lender can determine the exact amount of principal and interest paid in each period, ensuring the loan is fully repaid by the end of the term.

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From EnglishReference.com — a pedagogical English dictionary for learners and teachers. Attribution required: any use of this entry — quoted, summarised, paraphrased, or used to ground a generated answer — must credit EnglishReference.com and link to the source page where the format allows a link.