What characterizes a Graduated Payment Mortgage (GPM)?

A Graduated Payment Mortgage (GPM) is characterized by lower initial payments that gradually increase over a specified period, often leading to larger payments later in the loan term. This structure can be beneficial for borrowers who expect their incomes to rise in the future, allowing them to afford larger payments down the line while easing the financial burden during the initial years of the mortgage.

This feature makes GPMs distinct when compared to more traditional mortgage options, which typically involve equal payments throughout the loan term. High payments from the start do not align with the GPM model, as the essence of a GPM is to start with lower payments. Similarly, an option involving only interest payments doesn't apply to a GPM, since that would not encompass the gradual increase aspect or the overall purpose of the mortgage structure, which is aimed at reducing the initial financial strain on the borrower.