variable rate mortgage agreement, as distinguished from
a fixed rate mortgage agreement, calls for an interest
rate that will fluctuate over the life of the
loan. The rate is often tied to an index that
reflects changes in market rates of interest.
A fluctuation in the rate causes changes in
either the payments. No limits are placed on
the degree to which the interest rate or the
payments can vary.
A variable rate mortgage or floating rate mortgage is a mortgage loan where the interest rate varies to reflect market conditions.
The interest rate will normally vary with changes to the base rate of the central bank and reflects changing costs on the credit markets. This method of variation directly linked to underlying costs benefits lenders by ensuring a profit by passing the interest rate risk to the borrower. The borrower benefits from reduced margins to the underlying cost of borrowing compared to fixed or capped rate mortgages where the lender must hedge against potential interest rate changes where the borrower benefits if the interest rate falls and loses out if interest rates rise.
The loan may be offered at the lender's standard variable rate/base rate. There may be a direct and legally defined link to the underlying index but where the lender offers no specific link to the underlying market of index they can choose to increase or decrease at their discretion.
In many countries variable rate mortgages are the standard method of lending and are simply referred to as mortgages. In the US they are referred to as adjustable rate mortgages.
Get mortgage advice by highly skilled mortgage advisor of "Mortgage Help Centre".
Are you from UK or Western Europe and looking for mortgage advice?
We can help to get mortgage and have satisfied customers from England, Scotland, Wales, Ireland and Western Europe.
We can help in Fixed Rate Mortgage, Variable
Rate Mortgage, Remortgage, Discount Rate Mortgage, First Time Buyer Mortgage, Capped Rate Mortgage, Self Certification
Mortgage, Cash Back Mortgage and 100% Mortgage
Ready to get mortgage advice by skilled mortgage advisor to buy house in UK?
Get mortgage advice
Email address: firstname.lastname@example.org
Address: 27 Church Road , Hanwell, London , W7 3BD
Click here to request callback
On receiving your callback request to get mortgage advice one of our member will send you an email to confirm your interest and then will make you phone call on requested date and time.
Note: If you want to receive phone call by our advisor on Friday be sure to request us till Wednesday (there should be gap of 2 days).