Afdragsperiode

Afdragsperiode is a term used in Danish and Norwegian lending to denote the portion of a loan during which the borrower repays the principal (afdrag) in regular installments, in addition to interest. The length of the afdragsperiode is defined in the loan agreement and constitutes the amortization schedule. It is distinct from the overall loan term, which is the total time horizon of the loan. The afdragsperiode determines how quickly the loan is paid off and influences monthly payments and the total amount of interest paid over the life of the loan.

During the afdragsperiode, each payment typically consists of an interest portion and a principal portion. Early in the period, a larger share goes to interest, and the principal portion gradually increases as the outstanding balance falls. A longer afdragsperiode generally lowers monthly payments but increases total interest, while a shorter period raises monthly payments but reduces total interest.

Loans may include variations such as fixed afdragsperiods, flexible amortization, or periods with no amortization (afdragsfrihed) as part of product offerings. In mortgage markets, lenders often provide an amortization schedule to help borrowers understand when and how much principal will be repaid. Regulatory disclosures typically require lenders to present the afdragsplan clearly to consumers.