Personal Finance
Money Management

What is a negative amortization loan?

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Wiki User
2006-07-19 01:25:30

In finance, negative amortization, also known as NegAmMort, is

an amortization method in which the borrower pays back less than

the full amount of interest owed to the lender each month. The

shorted amount 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. Also known

as deferred interest or Graduated Payment Mortgage (GPM).

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