Amortization is the process of decreasing, or accounting for, an amount over a period. The word comes from Middle English amortisen to kill, alienate in mortmain

Mortmain

Mortmain is a legal term that means ownership of real estate by a corporation or legal institution that can be transferred or sold in perpetuity; the term is usually used in the context of its prohibition...

, from Anglo-French amorteser, alteration of amortir, from Vulgar Latin admortire to kill, from Latin ad- + mort-, mors death.

When used in the context of a home purchase, amortization is the process by which your loan principal decreases over the life of your loan. With each mortgage payment that you make, a portion of your payment is applied towards reducing your principal and another portion of your payment is applied towards paying the interest on the loan. An amortization table shows this ratio of principal and interest and demonstrates how your loan's principal amount decreases over time.

Amortization is generally known as depreciation

Depreciation

Depreciation refers to two very different but related concepts:# the decrease in value of assets , and# the allocation of the cost of assets to periods in which the assets are used ....

 of intangible asset

Intangible asset

Intangible assets are defined as identifiable non-monetary assets that cannot be seen, touched or physically measured, which are created through time and/or effort and that are identifiable as a separate asset...

s of a firm.

Applications of amortization

• Amortization (business)
  Amortization (business)
  In business, amortization refers to spreading payments over multiple periods. The term is used for two separate processes: amortization of loans and amortization of intangible assets.-Amortization of loans:...
  
  , the allocation of a lump sum amount to different time periods, particularly for loans and other forms of finance, including related interest
  Interest
  Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
  
   or other finance charges.
  • Amortization schedule
    Amortization schedule
    An amortization schedule is a table detailing each periodic payment on an amortizing loan , as generated by an amortization calculator. Amortization refers to the process of paying off a debt over time through regular payments...
    
    , a table detailing each periodic payment on a loan (typically a mortgage), as generated by an amortization calculator
    Amortization calculator
    An amortization calculator is used to determine the periodic payment amount due on a loan , based on the amortization process....
    
    .
  • Negative amortization
    Negative amortization
    In finance, negative amortization, also known as NegAm, deferred interest or graduated payment mortgage, occurs whenever the loan payment for any period is less than the interest charged over that period so that the outstanding balance of the loan increases...
    
    , an amortization schedule where the loan amount actually increases through not paying the full interest
• Amortized analysis
  Amortized analysis
  In computer science, amortized analysis is a method of analyzing algorithms that considers the entire sequence of operations of the program. It allows for the establishment of a worst-case bound for the performance of an algorithm irrespective of the inputs by looking at all of the operations...
  
  , analyzing the execution cost of algorithms over a sequence of operations.
• Amortization of capital expenditures of certain assets under accounting rules, particularly intangible assets, in a manner analogous to depreciation
  Depreciation
  Depreciation refers to two very different but related concepts:# the decrease in value of assets , and# the allocation of the cost of assets to periods in which the assets are used ....
  
  .
• Amortizing loan
  Amortizing loan
  In banking and finance, an amortizing loan is a loan where the principal of the loan is paid down over the life of the loan, according to some amortization schedule, typically through equal payments....
  
  
• Amortization (tax law)
  Amortization (tax law)
  In tax law, amortization refers to the cost recovery system for intangible property. Although the theory behind cost recovery deductions of amortization is to deduct from basis in a systematic manner over an asset's estimated useful economic life so as to reflect its consumption, expiration,...
  
  

Amortization is also used in the context of zoning regulation

Zoning

Zoning is a device of land use planning used by local governments in most developed countries. The word is derived from the practice of designating permitted uses of land based on mapped zones which separate one set of land uses from another...

s and describes the time in which a property owner has to conform or relocate when the property's use constitutes a preexisting nonconforming use under amended zoning regulations.