The statement: Amortization is simply the fact that you are paying down the loan principal, not the type of interest calculation used (as opposed to, for instance, an interest only loan where you only pay interest, without reducing the principal for a number of years).
is correct. There are different ways of doing the calculations. One way would be to pay a fixed % of the principle each month and all interest on principle for 1 one month period. The problem with this is that payments will be highest at the beginning of the mortgage and would drop over time.
Most people’s wages increase over time (not decrease, and maybe not increase in real terms but the same inflation that kills your salary reduces the dollar value of the balance on the mortgage). The other approach, and more common (ie. standard fixed rate amortizing loan), is to calculate a constant monthly payment that would pay off the mortgage by the end of the term and cover any accrued interest on remaining balance over the life of the mortgage. The calculations to figure this out are a little more involved. I can put the formula up (though there are also mortgage calculators that do the same thing)
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