The Law Dictionary

Featuring Black’s Law Dictionary Free Online Legal Dictionary 2nd Ed.

What is NEGATIVE AMORTIZATION

Expected condition with an increasing principal amount increases following each monthly installment payment. Graduated payment mortgages (GPM) designed to match young executives or professionals with low starting income but high, rapid growth potential have this characteristic. The initial months’ payments are insufficient to cover the interest. The unpaid interest is added to the principal balance every month. Also known as partially amortizing loan.

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