What is a key characteristic of a Growth Equity Mortgage?

A key characteristic of a Growth Equity Mortgage is that a portion of each payment reduces the principal balance. This structure allows the borrower to build equity in the property over time as they make their mortgage payments. Unlike some other mortgage types where payments may be mainly oriented towards interest, a Growth Equity Mortgage is designed to ensure that each payment contributes toward reducing the amount borrowed, thereby increasing the equity in the home on a gradual basis.

This model can provide significant benefits to borrowers as they see a decrease in the outstanding debt relative to the property's value, potentially leading to greater financial security and opportunities for refinancing or selling the home in the future as equity builds up. This characteristic aligns with the larger goal of many homeowners, which is to pay down debt and strengthen their financial position over time.