What is NEGATIVE AMORTIZATION? What does NEGATIVE AMORTIZATION mean?

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What is NEGATIVE AMORTIZATION? What does NEGATIVE AMORTIZATION mean? NEGATIVE AMORTIZATION meaning - NEGATIVE AMORTIZATION definition - NEGATIVE AMORTIZATION explanation.

Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license.

In finance, negative amortization (also known as NegAm, deferred interest or graduated payment mortgage) occurs whenever the loan payment for any period is less than the interest charged over that period so that the outstanding balance of the loan increases. As an amortization method the shorted amount (difference between interest and repayment) is then added to the total amount owed to the lender. Such a practice would have to be agreed upon before shorting the payment so as to avoid default on payment. This method is generally used in an introductory period before loan payments exceed interest and the loan becomes self-amortizing. The term is most often used for mortgage loans; corporate loans with negative amorti...

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