Negative Amortization
When your mortgage payment fails to cover the full interest owed, causing the outstanding balance to grow instead of shrink.
Negative amortization occurs when your monthly payment is less than the interest accruing on the mortgage, so the unpaid interest is added to your principal balance — making the loan grow rather than shrink. In Canada, this primarily happens in fixed-payment variable mortgages that hit their trigger rate. OSFI has flagged negative amortization as a systemic risk and required lenders to actively manage borrowers out of it by raising payments, converting to fixed, or requesting lump-sum paydowns once the trigger point (typically 105% of original principal) is reached.