graduated-payment mortgage means: This type of loan is a stepped-payment loan where the initial payments for the borrower are lower than those in a similar level-rate mortgage. Over a set period, the payments will increase gradually, usually over 3, 5 or 7 years. Then, they are locked at a fixed level-pay schedule that is higher than the level of amortization for a comparable level-pay mortgage. Add the principal balance to what is owed to mortgage lender to make up the difference in the actual amount borrowers pay to the total amortization. (in Stock Market Dictionary)