Super Finance Glossary
Over 10,000 financial glossary terms...
Negative Amortization
Negative Amortization
Definition: A loan repayment schedule in which the outstanding principal balance of the loan increases, rather than amortizing, because the scheduled monthly payments do not cover the full amount required to amortize the loan. The unpaid interest is added to the outstanding principal, to be repaid later.
Definition: A loan repayment schedule in which the outstanding principal balance of the loan increases, rather than amortizing, because the scheduled monthly payments do not cover the full amount required to amortize the loan. The unpaid interest is added to the outstanding principal, to be repaid later.
Negative Amortization
Definition: An increase in the outstanding balance of a loan resulting from the failure of periodic payments to cover required interest charged on the loan. Generally occurs during the first 5 to 10 years of the life of a graduated payment mortgage (GPM) and under indexed loans for which the applicable interest rate may be changed without affecting the monthly payments.
Definition: An increase in the outstanding balance of a loan resulting from the failure of periodic payments to cover required interest charged on the loan. Generally occurs during the first 5 to 10 years of the life of a graduated payment mortgage (GPM) and under indexed loans for which the applicable interest rate may be changed without affecting the monthly payments.
