DEFINITION of 'ZeroCoupon Mortgage'
A form of commercial financing in which regular interest and principal payments are deferred until maturity, rather than paid over the course of the loan. While the coupon rate on such a mortgage is technically zero because there are no regular coupon or interest payments, interest accrues and is rolled into the principal amount at maturity.
BREAKING DOWN 'ZeroCoupon Mortgage'
Zerocoupon mortgages are especially useful for commercial projects where cash flows to service debt may not be available until the project nears completion. As total interest plus principal repayment is only received by the lender when the loan matures, the credit risk is significantly higher than with a conventional loan. As such, lenders may only offer this form of financing to established commercial borrowers with pristine credit records.

ZeroCoupon Bond
A debt security that doesn't pay interest (a coupon) but is traded ... 
NonAmortizing Loan
A type of loan in which payments on the principal are not made, ... 
Deferred Interest Bond
A debt instrument that pays interest only upon maturity. Unlike ... 
Deferred Interest Mortgage
A mortgage loan that allows the borrower to make minimum payments ... 
Deferred Interest
The amount of interest that is added to the principal balance ... 
Coupon Stripping
The separation of a bond's periodic interest payments from its ...

Personal Finance
Understanding the Mortgage Payment Structure
We explain the calculation and payment process as well as the amortization schedule of home loans. 
Personal Finance
InterestOnly Mortgages: Home Free Or Homeless?
These loans can be beneficial, but for many borrowers, they present a financial trap. 
Investing
How Do I Calculate Yield To Maturity Of A Zero Coupon Bond?
Yield to maturity is a basic investing concept used by investors to compare bonds of different coupons and times until maturity. 
Investing
Comparing Yield To Maturity And The Coupon Rate
Investors base investing decisions and strategies on yield to maturity more so than coupon rates. 
Personal Finance
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. 
Investing
What Does Principal Mean?
For banks, principal refers to the amount due on a loan, and is used to calculate interest payments. 
Investing
Understanding The Mortgage Payment Structure
While a mortgageâ€™s size and term set the baseline, the interest, taxes and insurance all influence the amount of the monthly payment. 
Investing
What's a Maturity Date?
Maturity date is the final date when any remaining principal and any unpaid interest are due on a debt.

Why does the majority of my mortgage payment start out as interest and gradually ...
When you make a mortgage payment, the amount paid is a combination of an interest charge and principal repayment. Over the ... Read Answer >> 
How do I calculate yield to maturity of a zero coupon bond?
Find out how to calculate the yield to maturity for a zero coupon bond, and see why this calculation is more simple than ... Read Answer >> 
When capitalizing interest, will interest accrue while you are in a deferment?
Learn what capitalized interest is. Understand why interest accrues while a person is in a deferment, based on capitalized ... 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 is the difference between yield to maturity and the coupon rate?
Read about some of the basic differences between a debt security's coupon rate and its yield to maturity, and learn which ... Read Answer >> 
What is the difference between a zerocoupon bond and a regular bond?
The difference between a zerocoupon bond and a regular bond is that a zerocoupon bond does not pay coupons, or interest ... Read Answer >>