In real estate finance, a Growing Equity Mortgage is a fixed rate loan with payments that increase over time. It allows for lower initial payments, making the loan more affordable at the beginning, while scheduled payment increases are designed to match anticipated growth in the borrower’s income.
As payments rise, a larger portion is applied to principal, which shortens the overall loan term and builds equity more quickly. Growing equity mortgages are suited for borrowers who expect steady income increases and want to pay off their loan faster than with a traditional fixed payment mortgage.
