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Finance Dictionary and Glossary of Investment Terms
Negative Amortization
Definition 1.
An increasing value of principal, due to payment amounts being smaller than interest accrued for the loan.
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Definition 2.
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.
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Definition 3.
A gradual increase in mortgage debt that occurs when the monthly payment is insufficient to cover the interest due, and the balance owed keeps increasing (at least in the first few years).
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