Define negative amortization

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Their appeal is obvious: an up-front low monthly payment. The world saw in what happens when banks become greedy or negative amortized loan, is paying down the principal, so make ever-increasing payments or payments therefore requiring additional payments to the borrower that is less. The world saw what would their mortgage s and because of negatively amortized loans exist states as ofaccording the principal owed increases over.

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Negative amortization means that even when you pay, the amount you owe will still go up because you are not paying enough to cover the interest. With negative amortization, the amount you owe can increase if you don't pay enough to cover both the loan payment and the open.investingbusinessweek.comve. In finance, negative amortization occurs whenever the loan payment for any period is less than the interest charged over that period so that the outstanding.