Amortisation

An amortising loan is designed so that identical regular payments fully clear the debt by the end of the term. Inside each payment the mix shifts: early on, a larger share covers interest; later, a larger share reduces principal. The schedule of that shift is the amortisation schedule.

Amortisation explains a common surprise: why the balance seems to fall slowly in the first year of a loan. It isn't a trick; it's the maths of charging interest on a balance that is still large. It's also why refinancing tends to matter most when there's meaningful term left: that's when most of the remaining interest is still ahead of you.