Also referred to as paying Capital & Interest. Each month part of the payment is assigned to servicing the Interest, and the rest is used to reduce the Capital. As Capital payments are made, the outstanding Capital balance reduces. Therefore the portion of the payment assigned to interest reduces, and the portion assigned to Capital repayment increases. If you have a Fully Amortising Loan then providing all payments are made are made in full and on time, then the mortgage debt would be fully repaid at the end of the mortgage term.
