Graduated Payment / Growing Equity Mortgages?

According to the Internet, there are a variety of different mortgage types, including the titular two.

However, the Internet is silent on where one can actually find these. Does any company actually offer these types of loans? Is there a way to find them?

In the era of computers it would seem simple enough to structure payments this way, probably benefits the mortgage holder a bit from smaller payments up front = more early interest but more quickly frees up their principal towards the end when interest is a smaller portion of the payments.

As to whos doing it…no clue…but it seems like something that banks would love to jump on.

Two variations on ‘low start loans’.

Probably a lot fewer offering it now, than when it was popular just before being part of the sub-prime mortgage crash that triggered the 2007 finance crash.

In a rising real-estate market, low-start loans were a darling of the left. They were going to enable poor people to get into the real estate market, escape the rental trap, and reduce the wealth divide. Banks were encouraged to offer them as part of their community and social responsibility.

In Australia, low-start loans had already had their day, and been found to trap poor people in the real estate market, wipe out their capital, and increase the wealth divide, and had fallen out of favor several years before they fueled the American sub-prime mortgage crash. It was appalling realizing that well-meaning people had encouraged the low-start loans in the USA after the international example had already shown that low-start loans were a bad thing for the people they were meant to help.

Australia also went through ‘deregulation’ before the USA, and had demonstrated some of the pitfalls of that path. It was appalling to realize that well meaning people were pushing the American finance system down that path without any awareness of the kind of problems that had already been demonstrated.

In Australia, the two policies, low-start loans and deregulation, did not happen at the same time. Low-start loans were offered to poor people by a regulated salesforce, trapping people in poverty. Later, a deregulated salesforce ripped off wealthy retirees.

It was appalling to realize that the USA had failed to learn from example, and had made both mistakes at the same time, allowing a deregulated sales workforce to rip off poor people and crash the banking system.

When we first moved to this area, we had a “2-1 buydown” loan: the initial rate was (let’s say) 8%, it went up to 9% after 1 year, then 10% the next, where it would remain forevermore. That sounds a bit like the GPM loan you describe. Note that this was 30+ years ago. Reading the link, it notes that these sometimes allow for negative amortization.

The second one: well, you could basically do that yourself by overpaying a bit every month, then increasing the amount every few months. e.g. pay 20 bucks extra the first 6 months, then 50 bucks extra for a year, then 150 extra for a year, and so on. Unless the rate nets out to something lower than a conventional fixed rate loan, to my mind there’s nothing to be gained by locking in such a scheme - and potentially everything to lose. Better to prepay when you can, then if things get tight you can drop down to your regular payment.