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Negative Amortization

A situation where your mortgage payment is not enough to cover the interest due.

The interest then builds up and your principal increases instead of shrinking.

Negative amortization can occur when you have a fixed-payment variable-rate mortgage and prime rate rises significantly. 

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Last modified: April 18, 2010

Robert McLister is one of Canada’s best-known mortgage experts. A mortgage columnist for The Globe and Mail, interest rate analyst and editor of MortgageLogic.news, Rob has been covering Canada's mortgage market since 2007.

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