What is an amortizable loan?

A loan is said to be amortisable when the capital is repaid in several instalments over time. During the entire duration of the loan and according to a schedule established beforehand, the borrower will repay part of the capital with interest. It is the opposite of a bullet loan.

Example in the context of a real estate crowdfunding operation: the investor lends €1,000 at 10% per year for 24 months, to be amortised annually:

- 600 € at the end of the 1st year (500 € of capital + 100 € of interest, calculated as follows at 10%*1000 € of capital over 12 months)
- 550 € at the end of the 2nd year (500 € capital + 50 € interest, calculated as follows at 10%*500 € capital over 12 months)

Related articles
- What is a bond?
- What is a term loan?
- What are the risks involved?
Was this article helpful?
Thank you!