Specifies the maximum change in the interest rate of the loan and the minimum period at which the change occurs. The interest rate change includes an increase as well as a decrease in the rate. As most loans have a floating rate of interest, a sudden hike in interest rates will only affect that of the loan by an amount equal to the cap and the rate will also change only after the specified time period has passed.
Related information about periodic interest rate cap:
- Periodic Interest Rate Cap Definition | Investopedia
A part of an interest rate cap structure on loans and mortgages. The periodic interest rate cap limits the amount by which the interest rate on an adjustable rate ...
- What is periodic interest rate cap? definition and meaning
Definition of periodic interest rate cap: Specifies the maximum change in the interest rate of the loan and the minimum period at which the change occurs.
- Adjustable-Rate Mortgage (ARM) Interest-Rate Caps, Periodic Caps ...
Let us suppose you have an ARM with a periodic interest-rate cap of 2%. At the first adjustment, the index rate goes up 3%. The example shows what happens.
- Adjustable-Rate Mortgages - Consumer Financial Protection Bureau
What is the index and what is the current rate? (See chart on page 8.) What is the margin for this loan? Interest-rate caps. What is the periodic interest-rate cap?
- Adjustable Rate Mortgages
A periodic interest rate cap limits the interest rate change from one adjustment period to the next. Interest rate caps are beneficial in rising interest rate markets, ...
- Finance Types - No Red Tape Mortgage
Optional Features. Periodic / Interest Rate Cap / Life Interest Rate Cap / Initial Adjustment Rate Cap / Fixed rate conversion option. ARM Index ...
- 1Yr. ARM Disclosure - Franklin Savings Bank
The amount of the periodic interest rate cap is set forth on the reverse side in the. TABLE OF INFORMATION. During the life of the loan, your interest rate cannot ...
- What Is an Interest Rate Cap? - Financial Web
The periodic interest rate cap limits the amount of interest that can be charged for a particular period in the loan. For example, the interest rate might only be able ...