In a Graduated Payment Mortgage, the payment starts low and gradually rises with time usually for a maximum of 15 years of the mortgage term after which the payment stays same. The increase is not caused by the interest rate but by the change in the monthly mortgage payment.

This type of mortgage suits well with the beginners in their career path and expects an increment in his salary in the future. It provides the opportunity to buy a home at the beginning with low rate and goes up as the income increases. This is the chief advantage with this kind mortgage.

But it should be remembered at the same time that while making the lower payments initially, the interest that is not paid gets added to the principal amount of the loan. If somebody wants to sell a house after few years of the mortgage, then he will have to pay larger sum to pay off the loan than at an initial stage.

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