Price level adjusted mortgage – this term is used in the sphere of Law of Contracts, where details a loan contract, secured with mortgage on real estate owned by the borrower. The mortgage loan has fixed interest amount, and the principal is adjusted to react against inflation. For example, you establish a mortgage on your house in favor of the creditor, for securing your 20 years mortgage loan, but after 5 years the house prices in the area drop so your house no longer could secure this amount of the loan – so the principal of the loan will be adjusted to meet the current economy conditions.
*Note that it is advisable to hire a lawyer who to consult you on mortgage loan agreements. Lawyers are qualified in Law and they know what terms and conditions should be implemented in such forms to protect your interests; as well to consult you on the clauses of proposed mortgage loan greements to you for signing.