Skip-Payment Mortgage


DEFINITION of 'Skip-Payment Mortgage'

A mortgage program that allows the borrower to skip (not pay) a mortgage payment. Depending upon the specific lender, there is generally no charge associated with skipping a payment. However, the interest accrued over the skipped-payment period is added to the principal balance of the mortgage, and the remaining amortization schedule is recalculated in a process called "deferred interest" or "negative amortization".

BREAKING DOWN 'Skip-Payment Mortgage'

Skip-payment mortgages are not widely marketed in the United States, but they are widely available in other countries, like Canada. Some skip-payment mortgages allow the borrower to skip up to four months of consecutive payments for reasons such as family issues or sickness.

  1. Amortization Schedule

    A complete schedule of periodic blended loan payments, showing ...
  2. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  3. Fixed Interest Rate

    An interest rate on a liability, such as a loan or mortgage, ...
  4. Interest Rate

    The amount charged, expressed as a percentage of principal, by ...
  5. Deferred Interest

    The amount of interest that is added to the principal balance ...
  6. Negative Amortization

    An increase in the principal balance of a loan caused by making ...
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    Unlike subprime mortgages issued by some conventional commercial lenders, Federal Housing Administration (FHA) loans do not ... Read Full Answer >>
  2. Can FHA loans be refinanced?

    Federal Housing Administration (FHA) loans can be refinanced in several ways. According to the U.S. Department of Housing ... Read Full Answer >>
  3. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  4. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  5. How many FHA loans can I have?

    Generally, the Federal Housing Administration (FHA) does not insure more than one mortgage per borrower. This is to prevent ... Read Full Answer >>
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