This article explains how a Self-Repaying Mortgage (SRM) reduces its balance over time and how this process differs from a traditional mortgage.
What Makes a Self-Repaying Mortgage Different
A Self-Repaying Mortgage is designed to reduce its outstanding balance using yield generated within the Peoples Reserve ecosystem. Instead of relying only on monthly payments from the borrower, the mortgage is supported by mechanisms that contribute toward principal reduction over time.
This structure allows the loan balance to decline through a combination of scheduled payments and internally generated offsets.
How the Balance Is Reduced Over Time
With an SRM, balance reduction happens through multiple aligned components rather than a single repayment source.
- Regular payments: Scheduled payments continue to apply toward the mortgage as expected.
- Yield contribution: Eligible yield generated within the system is applied to reduce the outstanding balance.
- Ongoing adjustment: As the balance decreases, future interest calculations are applied to a lower principal.
Over time, this structure accelerates payoff compared to a traditional mortgage that relies only on borrower payments.
Why This Matters
Reducing the loan balance more efficiently can:
- Lower total interest paid over the life of the mortgage
- Shorten the effective repayment timeline
- Improve long-term equity position sooner
The self-repaying design aligns incentives between the borrower and the platform by focusing on balance reduction rather than long-term interest accumulation.
What Affects the Rate of Reduction
The speed at which an SRM balance is reduced can vary based on several factors:
- Your Loyalty Level
- Market conditions affecting yield generation
- The remaining principal balance
Because these factors can change over time, balance reduction is not linear and may vary from period to period.
Important Things to Understand
- An SRM is still a mortgage and requires ongoing payments
- Balance reduction depends on system performance and eligibility
- Results may differ from traditional amortization schedules