In finance, negative amortization, also known as NegAm, occurs whenever the loan payment for any perio is less than the interest charged over that period so that the outstanding balance of the loan increases. As an amortization method the shorted amount (difference between interest and repayment) is then added to the total amount owed to the lender. Such a practice would have to be agreed upon before shorting the payment so as to avoid default on payment. Also known as deferred interest or Graduated Payment Mortgage (GPM). This method is generally used in an introductory period before loan payments exceed interest and the loan becomes self-amortizing.