Business and Personal Finance Dictionary

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• SELF-AMORTIZING LOAN
  
  A self-amortizing loan is one thats paid off over a specific period of time as the borrower makes regular installment payments. Part of each payment covers the interest on the loan, and the rest is applied to the principal. When the last payment is made, both principal and interest have been paid in full. Self-amortizing loans can be bundled together and offered for sale as debt securities, such as those available through the Government National Mortgage Association (GNMA). If you buy GNMA or similar bonds, you get back part of your principal as well as the interest youve earned each time you receive an interest payment. There is no lump-sum repayment of principal when the bond matures.
  
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