Amortization Schedule
Synonyms: Repayment Schedule، Amortization Table، Installment Schedule
Last updated: 2026-09-25
Short Definition
An amortization schedule is a table showing every installment of a financing with its due date and amount, how it splits between profit (term cost) and principal, and the balance remaining after each installment, until the balance reaches zero at the end of the term.
Overview
Legal Basis
SAMA’s Guide for Calculating the Early Payment Amount dated 16/10/1436H (1 August 2015) and its key conditions (declining-balance method and contents of the amortization table); the Implementing Regulation of the Finance Companies Control Law (Art. 82: allocating term cost by the declining-balance method and stating it in the contract; Art. 78(10): installment amounts, number, duration and allocation method); and the Implementing Regulation of the Real Estate Finance Law issued by Minister of Finance Decision No. (1229) dated 10/4/1434H (Art. 9: mandatory contents of a real-estate finance contract, including the installment schedule).
Practical Example
Lamia has financing of SAR 500,000 over 20 years at a fixed 5% (illustrative figures), with an installment of about SAR 3,300. The amortization schedule shows that the first installment consists of about SAR 2,083 of profit and SAR 1,217 of principal, leaving a balance of about SAR 498,783. After 5 years (60 installments) the balance is still about SAR 417,274 even though she has paid nearly SAR 198,000, and after 10 years it is about SAR 311,108. When she decides to repay early after the 60th installment, the amount is taken from the schedule: the balance of about SAR 417,274 plus compensation of no more than the next three months’ term cost on the declining balance (about SAR 5,196), i.e. about SAR 422,470 — instead of paying about SAR 176,700 of remaining profit had she continued to the end.
Common Mistakes
- ✗Not requesting or reviewing the amortization schedule at signing, although it is the basis for any early-repayment calculation.
- ✗Assuming that halfway through the term half the principal has been repaid, when the balance is much higher because profit is concentrated in early installments.
- ✗Not asking for an updated schedule after each variable-rate recalculation or after any partial payment or modification.
- ✗Confusing total installments paid with the remaining balance when negotiating a sale or refinancing.
- ✗Accepting a calculation method that is not declining-balance, which breaches SAMA’s instructions.
International Differences
Declining-balance amortization schedules are the global norm in home finance, and disclosure rules in the United States and Europe require borrowers to receive cost and installment information before contracting. Some markets historically used front-loaded profit methods for consumer loans. In Turkey and the UAE banks usually provide a repayment plan with the contract. The Saudi framework is distinctive in prescribing the schedule’s contents in writing and linking it directly to the early-repayment calculation.
