What type of mortgage allows for lower payments at the expense of a higher remaining balance at the end of the term?

A negative amortization mortgage is designed to allow for lower initial payments, which can be beneficial for borrowers who may have cash flow constraints. In this type of mortgage, the payments made do not cover the full amount of interest that accrues during the loan period. As a result, rather than reducing the principal balance, the unpaid interest is added to the outstanding loan amount. This leads to a higher remaining balance at the end of the loan term, as the borrower is essentially borrowing more over time instead of paying down the loan.

In contrast, a standard fixed-rate mortgage maintains consistent payments that cover both principal and interest, ensuring that the loan balance decreases over time. An interest-only mortgage allows the borrower to pay only the interest for a specified period, resulting in no reduction of the principal during that time but eventually requires the principal balance to be paid. Lastly, an adjustable-rate mortgage features periodic adjustments based on market interest rates, which may cause monthly payments to fluctuate but does not inherently lead to negative amortization as a deliberate payment structure.