Amortization of a loan through increasing installments that take into account the foreseeable nominal rise in the income of the borrowers, i.e., they try to make the real part of each month’s income that is dedicated to the repayment of a loan constant, and there is no greater relative sacrifice at the beginning. The first installments may not cover all the accrued interest, and the principal may only be amortized after a certain period. It is a rarely used method because it increases the risk for the lender and may create more uncertainty for the borrower, although it allows access to a larger loan under the same term and interest rate.
« Back to Glossary IndexAmortization by updated income
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