Which type of mortgage requires principal and interest payments at regular intervals?

An amortized loan is structured to require the borrower to make regular payments that cover both principal and interest throughout the life of the loan. This consistent repayment schedule ensures that the loan balance decreases over time, with each payment contributing to the total principal owed, who has been amortized, meaning the borrower will eventually pay off the entire loan by the end of the term.

In this structure, the early payments usually consist of a higher portion of interest, while later payments shift towards paying down the principal balance. This provides borrowers with a clear and predictable path to debt elimination.

Other types of loans listed do not provide this structure. For example, an acceleration loan typically refers to a clause that allows for the lender to demand repayment of the full loan amount upon certain events, which doesn’t involve structured principal and interest payments. An assemblage loan, which usually pertains to the combination of multiple parcels of real estate into one, does not specifically dictate a repayment schedule. An annuity loan generally refers to a financial product that pays out fixed payments over time, but it does not specifically define how mortgage payments are structured in terms of principal and interest. Thus, the amortized loan stands out with its particular repayment plan conducive to mortgages.