Definitions for "Payment Shock"
A term that refers to the difficulty that might arise from a large difference in monthly payments.
Payment shocks are when the discount period ends and the monthly repayments jump by a large amount to match the Standard Variable Rate. You must be sure that you can budget for this in your monthly expenses.
A situation that occurs when an adjustable-rate mortgage (ARM) monthly mortgage payments rise very sharply at an adjustment. The borrower may not be able to afford the payments the loan will require.
If you have taken out a mortgage on a low rate, the low rate end and the payment jump up the standard variable rate.
Occurs when the terms of a mortgage instrument require an increased payment and the borrower is unable to make or keep up with the increased payment obligation.