Deferred Interest Mortgage
  
You pay interest on your mortgage....later. Like it just accumulates. And then one day, you pay big. (See: Zero Coupon Bond.)
One of the more surprising customs in the financial world is the fact that there is a pre-payment or early redemption penalty on paying off debt early. You actually get charged extra for paying off a debt before it's due. One would think that most lenders would prefer getting their money back faster, but certain loans are structured for their monthly income streams, and the penalty is a disincentive to stray from the model.
Luckily, the mortgage industry is fairly flexible and innovative in accommodating a range of variable payment structures. Any type of mortgage designed to have either a portion or entirety of the standard interest to be paid later than on a monthly basis is said to be a "deferred interest mortgage." This term includes Adjustable Rate Mortgages and mortgages that deploy balloon payments. Adjustable rate mortgages may entail paying less interest for some months and more other months. Balloon payments often are calculated for a certain rate, but the payments are done in a single, consolidated large lump sum rather than incrementally on a regular calendar schedule.
So the next time you win that lottery, make sure you convert your mortgage to a deferred interest mortgage before making the balloon payment to close it out, or you can get hit with the pre-payment penalty.
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Finance: What is Deferred Compensation?8 Views
Finance allah shmoop what is deferred compensation Well you don't
get it today You get it next year at some
point you know differed If you've gotten paid today it
would have binford but then it was deford's so well
yeah it's money you don't get right now Yeah so
whywould compensation be deferred Well lotsa reasons think about a
bonus that a sales person might earn through out the
year like they get two grand in bonus money payable
next year for each month that they sell over four
pounds of yellowcake uranium powder Bob here did it in
january messed around in february and march and was a
good boy in april may and june and then on
lee hit one more sales goal ahead of christmas doing
four pounds in uzbekistanian november So bob had five months
hitting his sales bonus target and we'll have owed to
him ten grand in bonus money e compensation that was
deferred and noting that all bonuses are paid in january
of the following year like it's deferred to the following
year So from the company's perspective they show deferred compensation
as a line item or a thing on their balance
Sheet is a liability And then they converted to being
an expense when they pay everything out the first month
of the next year so come january Bob will be
very happy with his healthy bonus That is you know 00:01:29.357 --> [endTime] assuming he's still around to enjoy it there No
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