In housing finance, plam (price level adjusted mortgage) represents a type of lending instrument where the overall price index (as the gross national product deflator) is used to adjust the payment for the effect of inflation.
Although the payment remains constant, a nominal amount may increase in proportion to the price level rather than being a constant. Substantial advance in the housing finance caused by inflationary conditions may lead to the readjustment of the principle by the lender but the rate may remain the same.
All interest is paid first and outstanding balance at the beginning of the loan and it is a large sum, as a high percent of the payment goes into paying the interests. As time goes on, the allocated percent to the interest declines, and the principal amount increases.
As per property advisors, there are many advantages of using such method of investing in real estate as the owner pays a huge sum at the start and has a larger ownership interest in the property, and they are likely to maintain the property in a better manner and try not to default.