Finance
What does 'amortization' mean in the context of a mortgage?
AThe process of increasing the loan balance over time
BThe gradual repayment of the loan principal through scheduled payments over the loan term✓ Correct
CA penalty for early repayment
DThe transfer of the loan to a new lender
Explanation
Amortization is the systematic repayment of a loan through regular installment payments that cover both interest and principal. Early payments are mostly interest; later payments are mostly principal, until the loan is fully paid off.
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