pledged account mortgage

pledged account mortgage

A mortgage loan program in which money is placed in a savings account and the interest earned on the account is used to subsidize interest payments in the early years.It allows a borrower to buy property with much less equity while still enjoying a relatively low interest rate.The downside is for the person who put up the pledged account,because the money is at risk in the event of default,and it is not earning any interest for the investor.