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Amortization TableThe amortization table displays the breakdown of the monthly bond repayment into an interest and capital portion over the entire bond period. It also reflects the outstanding capital amount at the end of every month during the bond period. At the beginning of the bond period, the interest portion is the most significant because the outstanding capital is at its highest level. The interest portion gradually reduces as capital is repaid and the capital portion increases. Near the end of the bond period, the monthly bond repayment consists almost entirely of capital. It is interesting to note the percentage of capital which is outstanding throughout the bond period - generally, after 10 years of bond repayments, more than approximately 80% of the original capital will still be outstanding and after 15 years, more than approximately 50% will still be outstanding! These numbers are influenced by the applicable interest rate, but a lot of it has to do with the nature of amortization where a constant monthly amount is repaid over the entire bond period. |
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