Principal balance

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The principal balance, in regard to a mortgage or other debt instrument, is the amount due and owing to satisfy the payoff of the underlying obligation, less interest or other charges.

Amortized mortgage loans automatically pay a portion of each monthly payment to the principal balance, with the rest being paid as interest.

An interest-only loan does not require any money to be paid toward the principal balance each month, but such payment is allowable.[1]

See also[edit]


  1. ^ "Principal Balance Definition".