DEFINITION of 'Deferred Interest Mortgage'
A mortgage loan that allows the borrower to make minimum payments that are less than the entire amount of interest owed. The remaining interest is added to the amount of loan to be paid off. This is considered to be a negative amortization. The homeowner will let interest accrue, and will ultimately owe more than the original value of the loan. An adjustable rate mortgage (ARM) might offer this sort of payment structure.
BREAKING DOWN 'Deferred Interest Mortgage'
By making minimum payments that do not cover the loan principal, the balance on the loan is unlikely to get smaller since the interest is calculated on the outstanding principal. While low minimum payments do give the borrower payment flexibility, homeowners might not fully understand how complex this sort of mortgage can be.

Negative Amortization
An increase in the principal balance of a loan caused by making ... 
Accelerated Amortization
Extra payments made towards paying down a mortgage principal. ... 
Negatively Amortizing Loan
A loan with a payment structure that allows for a scheduled payment ... 
Deferred Interest
The amount of interest that is added to the principal balance ... 
Fully Amortizing Payment
A periodic loan payment, part of which is principal and part ... 
Amortization Schedule
A complete schedule of periodic blended loan payments, showing ...

Credit & Loans
Mortgage Basics: The Amortization Schedule
By Lisa SmithThe amortization schedule for a residential mortgage is a table that provides a breakdown of the schedule of payments from the loan's first required payment to the loan's final payment. ... 
Credit & Loans
Understanding the Mortgage Payment Structure
We explain the calculation and payment process as well as the amortization schedule of home loans. 
Home & Auto
Option ARMs: American Dream Or Mortgage Nightmare?
Option adjustable rate mortgages could make or break your homebuying experience. 
Personal Finance
Simple Interest Loans: Do They Exist?
Yes, they do. Here is what they are â€“ and how to use them to your advantage. 
Home & Auto
Top 6 Mortgage Mistakes
These common errors could end in foreclosure. 
Credit & Loans
How Interest Rates Work On A Mortgage
A stepbystep explanation of the interest calculations, mortgage types, and how the loan is eventually "retired" â€“ which means paid off. 
Credit & Loans
Mortgage Amortization Strategies
Should you get a 30year mortgage? A 15year one? Ways to decide which mortgage is the best fit. 
Credit & Loans
Mortgage Basics: Costs
By Lisa SmithPeople generally think about a mortgage in terms of the monthly payment. While that payment represents the amount of money needed each month to cover the debt on the property, the ... 
Credit & Loans
Mortgage Basics: FixedRate Mortgages
By Lisa SmithA fixedrate mortgage is a loan that charges a set rate of interest that does not change throughout the life of the loan. It is the traditional loan used to finance the purchase ... 
Credit & Loans
Mortgages: FixedRate Versus AdjustableRate
Both of these have advantages and disadvantages depending on your financial needs and prospects.

Which is better, a fixed or variable rate loan?
A variable interest rate loan is a loan in which the interest rate charged on the outstanding balance varies as market interest ... Read Answer >> 
What does it mean to capitalize accrued interest?
Understand what it means when a company capitalizes accrued interest. Learn what constitutes accrued interest and what constitutes ... Read Answer >> 
Why is more interest paid over the life of a loan when it is capitalized?
Learn what it means to capitalize interest on a loan. Understand why more interest is paid over the life of a loan when it ... Read Answer >> 
What are the best ways to pay off my mortgage quickly?
Learn how mortgage payments may be reduced and how to save thousands on mortgage loans by lowering the interest and principle ... Read Answer >> 
How does the loantovalue ratio affect my mortgage payments?
Understand what the loan to value ratio is, how the ratio is calculated and learn how it has an impact on your mortgage payments ... Read Answer >> 
What is the difference between a PMI (primary mortgage insurance) loan and a Federal ...
Understand the difference between a conventional mortgage that requires primary mortgage insurance and a Federal Housing ... Read Answer >>