A loan in which the repayment is made in more than one installment, as opposed to a bullet loan where the repayment is made in a single lump sum at the end of the term.
Annual Debt Service refers to the required annual principal and interest payments for a loan. In corporate finance, it is the cash required in a year for payments of interest and current maturities of principal on outstanding debt.
Debt service refers to the cash required in a given period, usually one year, for payments of interest and current maturities of principal on outstanding debt. This includes obligations from mortgage loans, corporate bond issues, and government bonds. Understanding debt service is crucial for assessing the financial stability and repayment ability of an individual or entity.
A fully amortized loan is one in which payments of both interest and principal are made regularly according to a set schedule, which are sufficient to liquidate the loan over its term; it is essentially self-liquidating.
Loan amortization refers to the reduction of debt by scheduled, regular payments of principal and interest sufficient to repay the loan at maturity. It is a fundamental concept in financial planning, allowing borrowers to understand how their loan is repaid over time.
A Self-Amortizing Mortgage is a mortgage designed to be paid off entirely through regular principal and interest payments over the loan term, without requiring a large lump sum payment at the end.
