Warning: Creating default object from empty value in /hermes/bosnacweb04/bosnacweb04ai/b1550/ipg.lantanasolutionsbh98965/fincyclopedia/wp-content/plugins/independent-core/admin/ReduxCore/inc/class.redux_filesystem.php on line 29 Negative Amortization – Fincyclopedia
[wpdreams_ajaxsearchpro id=44 ]
  • Monday, April 28, 2025
  • The Financial Encyclopedia
[wpdreams_ajaxsearchpro id=43 ]

Personal Finance

  Personal Finance   |   Terms
  • 292
  • October 23, 2022
[addtoany]
Notice: Undefined variable: myString in /hermes/bosnacweb04/bosnacweb04ai/b1550/ipg.lantanasolutionsbh98965/fincyclopedia/wp-content/themes/independent/template-parts/post/content-single.php on line 41

Negative Amortization

A situation (amortization that has a negative sign and effect) that arises when a mortgagor (a borrower) has an increasing outstanding mortgage balance despite all required periodical payment/ repayment are being made as per schedule. Negative amortization occurs with adjustable-rate mortgages that places a cap on periodical payment (e.g., monthly) as an amount (monthly payable) but not on the interest rate. That is, the mortgagor’s monthly payments will not be sufficient to cover all the interest owed to the mortgagee (the lender).

As a golden rule under personal finance, borrowers must not opt for such a type of mortgage that may result in a negative amortization situation.


[related_posts_by_tax title="See also" posts_per_page="10" taxonomies="post_tag"]

[pt_view id=a8a3414wsu]
[su_box title="Watch on Youtube" style="soft" box_color="#f5f5f5" title_color="#282828" radius="2" class="" id=""][su_row class=""][su_column size="1/1" center="yes" class=""] [/su_column][/su_row][/su_box]

Latest Terms

Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments

    Leave Your Comment

    Your email address will not be published.*