Question

If the payments of a loan are the decreasing every month and pay the same amount of principle and decreasing amounts interest every month according to the amortization schedule. The loan is a ________________ mortgage.

1. Constant amortization
2. Constant payment
3. Interest only
4. Graduated payment

Answer 1

A.constant amortization.

In constant amortization mortgage, the monthly principle repayment will be the same, where as the interest payments decline with each passing month.

Constant payment means both interest and principle are constant.

Interest only mortgage requires only regular interest payments and principle will be paid off in full at a later date.