I'm not the original poster but I'd like to tag on a question.
If we do a skip payment program on non-residential loans as follows:
- no principal or interest payments for 3 months,
- extend maturity date 3 months,
- accrue interest,
- at month 4 when they start to make payments, the normal P & I payment may not cover all the accrued interest. (The accrued interest that hasn't been paid stays in the accrued interest bucket and is NOT added to principal). The loan system will continue to credit accrued interest before principal with the payments.
They're paying more interest over the life of the loan because of the 3 month deferral. But at maturity, the loan should be fully amortized.
Am I correct that this structure is NOT considered a non-amortizing loan?