Definitions for "DEFERRED INTEREST MORTGAGE"
Interest is not paid during the deferral period. When the period is over, the accumulated interest is added to the original loan. Some lenders add this interest to the total of your loan to give a new loan figure and new interest payments. Others calculate your interest payments on the original loan as normal and then spread the repayment of the deferred interest over a set period of time. The latter method is better for you, as adding the deferred interest to the loan means you end up paying interest on the deferred interest
This is a mortgage where not all of the interest due is paid in the early years. The interest not paid is added to the mortgage. As a result a borrower will end up owing more than the initial mortgage amount and the interest payments will be higher over the rest of the mortgage term. This type of mortgage is usually marketed to professionals whose salaries are expected to increase rapidly in order that they can meet the later interest payments over the rest of the mortgage term.
A mortgage in which, for a specified period (usually at the start of the term), some or all of the interest is not paid. The ‘deferredâ€(tm) interest is usually added to the amount outstanding on the loan. This can have the effect of the borrower owin considerably more than originally borrowed.