UK Mortgage definition

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Index-linked mortgage

A method of repayment which enables the lender to index-link a loan to some measure of inflation, enabling the borrower to obtain a higher loan than would otherwise be possible. The mortgage repayments would also effectively be index-linked, on the assumption that as inflation rises, wages tend to rise, and it becomes easier over time to manage the mortgage repayments. An Index-linked mortgage only really works when the property market is rising.