Amortization Period

Category: finance

The total timeframe over which a loan balance is mathematically scheduled to be paid down to zero.

Commercial real estate loans often feature a 25-year amortization schedule to keep monthly payments low, but incorporate a 5-year or 10-year maturity "balloon" date, requiring the borrower to refinance or pay off the remaining balance in full at that mark.

Common Examples

• The underwriting model utilizes a twenty-year amortization period to calculate the sustainable monthly payment architecture.
• Extending the loan amortization period lowers your immediate monthly cash obligation but expands the cumulative interest paid across the cycle.