a limit on the amount of the interest rate
The maximum interest rate increase of an Adjustable Mortgage Loan. For example: a 120% loan with a 5% interest rate cap would have maximum interest for the life of the loan which would not exceed 17%.
Caps apply to adjustable rate mortgages (ARMs). To minimize the risk of extreme fluctuations in interest rates, caps are imposed on your rate. Caps protect you by limiting the percentage by which your rate can increase. An interest cap places an annual limit on the percentage by which a payment can increase at each adjustment period. For example, if your initial rate is 6% and your interest cap is 1 percentage point, your interest rate can rise to no more than 7% within the next year. See also caps.
is a consumer safeguard for adjustable rate mortgages that limits the amount your interest rate may change per year, for the life of the loan, or both.
A protective measure which limits the amount of interest that a loan may be increased or decreased by, which ultimately protects the consumer.
A set limit on the interest rate (e.g. the interest rate cannot exceed 8.25% for the Federal Stafford/Direct loan).
The maximum interest rate increase of an Adjustable Mortgage Loan. Can be referred to as a yearly cap or a total cap over the entire life of the mortgage loan.
It is a type of consumer protection that limits the amount of interest that a loan may be increased or decreased. Yearly interest caps and life of loan caps are available with many loans today. back