What is NEGATIVE AMORTIZATION LIMIT?

Specific loan types have this provision. The negative amortization amount is limited. The loan’s principal balance will not increase as the borrower pays less than the owed interest charge. Typically determined as a percentage of the loan’s original balance, the loan’s principal balance may not exceed a definitive stated amount.

More On This Topic



Link to This Definition
Did you find this definition of NEGATIVE AMORTIZATION LIMIT helpful? You can share it by copying the code below and adding it to your blog or web page.
Written and fact checked by The Law Dictionary