In an amortizing mortgage, which part of the fixed payment decreases over time?

In an amortizing mortgage, the structure of the fixed payment is such that it comprises two components: interest and principal. Initially, a larger proportion of the fixed payment goes toward covering the interest expense, which is based on the outstanding loan balance. As the borrower continues to make payments, the outstanding balance gradually decreases.

As a result of this declining balance, the interest portion of each payment reduces over time, because interest is calculated on the remaining loan amount. Therefore, as the loan is amortized—meaning that it is gradually paid off—the amount allocated to paying interest decreases while the portion that goes toward paying down the principal increases.

This unique characteristic is a critical feature of amortizing loans; the fixed payment remains constant, but the mix of interest and principal changes over time. Thus, the correct understanding is that the interest component decreases while the principal repayment increases over the life of the mortgage.