What is an amortisable loan ?

Repayment of the principal spread out over time

A loan is said to be amortisable when the principal is not repaid in a single lump sum, but gradually, according to a repayment schedule drawn up before the loan is taken out. At each repayment date, the borrower repays a portion of the principal, plus interest calculated on the outstanding principal.

This repayment method contrasts with a bullet loan, where only interest is paid during the term of the loan, with the principal being repaid in full at the final maturity date.

A practical example

Let’s take the example of an investor who lends €1,000 to a property developer at an annual interest rate of 10 per cent, over a term of 24 months, with annual capital repayments. The developer will then have to pay:

• At the end of the first year: €600 in total, comprising €500 in capital repayment + €100 in interest.
• At the end of the second year: a total of €550, comprising €500 in principal repaid plus €50 in interest.

In total, the investor does indeed recover their €1,000 principal, plus €150 in interest over the two years.

Why this matters to the investor

With an amortising loan, the principal is repaid gradually: the risk borne by the investor therefore decreases over time, unlike with a bullet loan where the entire principal remains at risk until the final maturity date.

Updated on: 17/09/2026