What Does Loan Maturity Mean?

Loan Maturity is the end of the life of your loan.

Does Maturity Mean My Loan is Paid Off?

The short answer to the above question is "maybe." It depends on amortization, the extent to which the principle of the loan is paid off. With all loans, the payments are typically broken down into 2 pieces. A portion will go towards interest, and a portion towards the principal. Depending on how the loan is written, if the loan is not fully amortized, then there will be a balance at the end of the life of the loan that must be paid off in a single payment. On the other hand, if the loan is fully amortized at loan maturity, then there will be no large balance left to pay.

An interest-only loan, a loan where the borrower only pays the interest due, poses a slight exception to this general rule. When the interest-only loan matures, there will be a balance due at loan maturity. The amount of the loan must either be refinanced or paid off.


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