Negative amortization refers to an increase in a loan's outstanding balance due to periodic debt service payments being insufficient to cover the required interest charges. This generally occurs with indexed loans where the interest rate can be adjusted without altering the monthly payment amount.
Outstanding balance is the amount currently owed on a debt after accounting for payments already made toward the principal and interest. It is a key figure in managing financing and understanding one’s debt obligations.
The remaining balance, also referred to as the outstanding balance, is the amount of loan principal that has not yet been repaid, plus any accrued interest or fees.
A Yield Maintenance Prepayment Penalty ensures lenders are compensated for the potential loss of interest income if a borrower pays off a loan early.
