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Payment Cap |
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Payment CapA maximum amount for a payment under an Adjustable Mortgage Loan, regardless of the increase in the interest rate. If the payment is less than the interest alone, negative amortization is created.Payment Cap Similar MatchesRepayment periodRepayment periodThe period over which the borrower must repay the lender. Repayment mortgageRepayment mortgageA mortgage where throughout the term, regular payments (usually monthly) are made to partly repay interest on the capital and to partly repay the capital itself (the amount of the loan).Initially the largest proportion of the repayments will be used to pay interest since the capital amount outstanding is at its highest value. Therefore over the initial years the capital will not reduce very much. However as the years proceed more and more of the monthly repayments will be applied to reducing the capital until towards the end of the term the large proportion will be paying off capital and a small proportion paying interest.In the event that interest rates rise then often the monthly repayments will rise accordingly. Alternatively, to keep the same monthly repayments the term will need to be extended. If interest rates fall then the reverse applies. It is usually a requirement of the lender (that is, a building society or bank) providing the mortgage that the borrower takes out life assurance so that repayment is made in the event of his/her death during the term. Graduated paymentGraduated paymentRepayment terms calling for gradual increases in the payments on a closed-end obligation. A graduated payment loan usually involves negative amortization. Payment defaultPayment defaultThis results when you are unable or simply unwilling to meet your mortgage repayments. If you default on your payments, the lender is ultimately entitled to sell your home in order to recover the loan. Different lenders will have different policies on how long they give you before they start the legal proceedings to recover the loan. Many will have a separate schedule of charges which you will incur before they start proceedings. PIK (Payment in kind) securitiesPIK (Payment in kind) securitiesHighly speculative bonds or preferred stock that pay interest or dividends through additional bonds or preferred stock. Further SuggestionsAdditional principal paymentRepayment vehicle Clearing House Automated Payments System (CHAPS) Deferred payment annuity clearing house automated payment system clearing house interbank payment system Annualised payment scheme Payment shock Balance of payments Payment in kind (PIK) bond maintenance payments balance of payments Periodic payment plan Payment of balance Payments imbalance Balance of payments deficit Balloon payment Payment gateway Documents against payment Optional payment bond Date of payment Repayment plan Balloon Payment call payment Receive versus payment |
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