With amortized loans, such as a mortgage, which of the following statements is correct?

An amortized loan (or installment loan) requires borrowers to make regular periodic payments, each consisting of both interest and principal. • In the early stages of repayment, a larger portion of each installment goes towards interest, since the outstanding principal is still high. • As payments continue, the outstanding principal reduces, causing the interest component to decline. • At the same time, the principal repayment portion gradually increases, leading to faster debt reduction in later years. Therefore, in amortized loans like mortgages, the share of interest decreases over time, while the share of principal repayment increases.