DEFINITION of 'Level Payment Mortgage'
A type of mortgage that requires the same dollar payment each month or payment period. Level payment mortgages allow borrowers to know exactly how much they will have to pay on their mortgages each pay period. This stability makes it easier for them to create budgets and stick to them.
BREAKING DOWN 'Level Payment Mortgage'
Level payment mortgages can be either fixed or variable-rate loans. This type of mortgage can sometimes result in negative amortization, which inflates the balance of the loan. These home loans are not appropriate for all types of homeowners and can result in financial entrapment for those who do not understand the possible consequences.