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Letter D
Deferred interest
This is where interest that is due on the mortgage is put off until a
later date.
These types of mortgages were commonly used when rates were much higher back in
the late 80's and early to mid 90's people used the ability to defer interest
until rates dropped at which point they could afford to pay it. Fortunately
rates did drop and they worked out to be quite a good deal.
Extreme care should be taken when using mortgages that defer interest, as there
is a strong likelihood of getting into negative equity because the interest that
you defer just gets added to the overall debt meaning your mortgages gets bigger
and bigger.
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