Amortization is the technical term for how your mortgage is paid off over time and determines the amount of your monthly mortgage payment. Except for interest-only mortgages, all mortgages amortize, which means the vast majority of mortgages amortize. For amortizing mortgages, the mortgage payment is split between principal and interest. The principal component of your mortgage payment goes to paying down the mortgage balance. The interest component of your mortgage payment represents the cost of borrowing money from the lender and does not reduce your mortgage balance.