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Amortization vs Buydown - What's the difference?

amortization | buydown | Synonyms |

Buydown is a synonym of amortization.



As nouns the difference between amortization and buydown

is that amortization is the reduction of loan principal over a series of payments while buydown is an accelerated repayment of the principal of a loan.

amortization

English

Alternative forms

* (UK) amortisation

Noun

  • The reduction of loan principal over a series of payments.
  • The distribution of the cost of an intangible asset, such as an intellectual property right, over the projected useful life of the asset.

    • See also

    * depreciation (of tangible assets) * depletion (of natural resources) * * * (projectlink) * (projectlink)

    buydown

    English

    (wikipedia buydown)

    Alternative forms

    * buy-down

    Noun

    (en noun)
  • (finance) An accelerated repayment of the principal of a loan.
  • A payment by a third-party to a lender to reduce some of all of the payments otherwise required, especially in first few years of the loan, thereby enhancing the apparent quality of the loan.

    • Synonyms

    * (accelerated repayment of principal) prepayment, accelerated or lump-sum amortization.

    Related terms

    * buy down