Growing Equity Mortgage

Growing Equity Mortgage

A growing equity mortgage, or GEM, is a fixed rate mortgage whose payments increase by a fixed amount over a given schedule for an established period of time, often the entire term of the loan (for example, the monthly payment may increase annually over the 15 year term of the loan). The monthly payment may increase monthly, or annually. The increase in payment is applied directly toward the principal of the loan.

There are a couple of advantages to growing equity mortgages:

  • The low up-front payments may make it easier for first-time home buyers to qualify for and afford a loan
  • A GEM is usually paid off faster than a traditional fixed rate mortgage

The major disadvantage of a growing equity mortgage is that the payment continues to go up, regardless of the borrower's income or financial position. This can lead to potential problems for the borrower meeting future mortgage payments.

Growing Equity Mortgage Interest Rate

The interest rate on growing equity mortgages is fixed.

Growing Equity Mortgage Term

Growing Equity Mortgages are available in 15 and 30 year terms.