A fixed-rate, fixed-schedule loan. It starts with lower payments than a level payment loan; payments rise annually, with the entire increase being used to reduce the outstanding balance; the increase in payments may enable the borrower to pay off a 30-year loan in 15 to 20 years, or less
MP] A mortgage on which the payment rises by a constant percent for a specified number of periods, after which it becomes fully-amortizing.
A mortgage in which the monthly payment of principal and interest begins at a low amount and progressively increases to a predetermined higher amount. Thereafter, the amount of the monthly payment remains constant for the remaining life of the loan. The interest rate is fixed for the entire period.