Amortization can help reduce the cost of a loan by allowing the borrower to pay down both the principal and the interest over time. With each payment, the interest portion of the payment will decrease, leaving more of the payment to go toward the principal. This can save a borrower a significant amount of money over the life of the loan. For example, according to Multifamily.loans, a borrower with a $1,000,000 loan at a 5% interest rate over a 10-year term would save $50,000 in interest payments by amortizing the loan.