Final answer:
The correct answer is c) Interest-only Mortgage. It is a non-amortized loan where only the interest is paid during the term, with the principal paid afterwards. It differs from an adjustable-rate mortgage where interest rates can change.
Step-by-step explanation:
A non-amortized loan in which the borrower pays only interest during the term of the loan and then repays the principal either in installments or in a lump sum after the interest-only period is known as a c) Interest-only Mortgage.
This differs from an adjustable-rate mortgage (ARM), where the interest rate can change with market rates, and a fixed-rate mortgage, which maintains the same interest rate through the life of the loan. Should inflation fall, a homeowner with an ARM might expect their interest rate to decrease, hence lowering their mortgage payments.