Mortgage Glossary: Deferred Interest Mortgage

Deferred Interest Mortgage

This is a mortgage in which not all of the interest due is paid in the early years. The interest that is not paid is added to the outstanding 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.

Deferred interest mortgages are usually marketed at times of high interest rates to young 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.

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See also: Financial Services, Mortgages