What are regular payments made to reduce the amount owed on a mortgage called?

Regular payments made to reduce the amount owed on a mortgage are referred to as principal payments. When a borrower makes these payments, they are directly reducing the outstanding balance of the loan. This is distinct from interest payments, which primarily cover the cost of borrowing and do not lower the principal balance.

Principal payments are crucial for paying down the mortgage over time, as they lead to increased home equity—the difference between the market value of the property and the amount owed on the mortgage. Making regular principal payments allows homeowners to gradually build equity in their property, which can be beneficial if they decide to sell the home or refinance the mortgage in the future.

In contrast, equity contributions refer to additional funds a borrower might add to their mortgage to increase their investment in the property, and interest installments are the parts of the mortgage payment that concern the interest owed, rather than the principal reduction. Mortgage repayments is a broader term that could refer to the total amount paid monthly, which includes both principal and interest, making it less specific in this context.