Zero-coupon mortgages are long-term commercial mortgages where all principal and interest payments are deferred until maturity.
Interest payable is included in the outstanding amount of the loan, which must be repaid on the expiration date or refinanced at prevailing interest rates.
Commercial projects may use zero-coupon mortgages when the cash flows needed to repay the debt are not available until the project is close to completion.
Lenders generally only offer zero-coupon mortgages to established commercial borrowers who have a clean credit history.