Self-amortizing loan(redirected from Self-Amortizing Loans)
A self-amortizing loan is one that's paid off over a specific period of time as the borrower makes regular installment payments.
Part of each payment covers some interest on the loan, and the rest is applied to the principal. When the last payment is made, both principal and interest have been paid in full.
Self-amortizing loans can be bundled together and offered for sale as debt securities, such as those available through Ginnie Mae (GNMA). If you buy GNMA or similar bonds, you get back part of your principal as well as the interest you've earned each time you receive an interest payment. There is no lump-sum repayment of principal when the bond matures.