Legal Definitions - contingent-interest mortgage

A contingent-interest mortgage is a type of mortgage where the interest rate is directly related to the economic performance of the pledged property. This means that if the property's value increases, the interest rate on the mortgage will also increase, and if the property's value decreases, the interest rate will decrease as well.

For example, let's say John takes out a contingent-interest mortgage on his house. If the value of his house increases, the interest rate on his mortgage will also increase, and he will have to pay more in interest. On the other hand, if the value of his house decreases, the interest rate on his mortgage will decrease, and he will have to pay less in interest.

Contingent-interest mortgages are not very common, and they can be risky for both the borrower and the lender. If the property's value fluctuates too much, the borrower may end up paying much more in interest than they anticipated, and the lender may not receive enough interest to cover their costs.