Mortgage Rates - FAQ
What is a Fixed Interest Rate?
Fixed Rate of Interest means that your Interest Rate is bound to remain unchanged throughout the duration of the loan. However, even if the Interest Rates drop on the market, you still cannot benefit from it.
What is a Floating Interest Rate?
A Floating Interest Rate means that your Rate of Interest will fluctuate in accordance with the market lending rate.
What is ARM?
ARM stands for Adjustable Rate Mortgage, in which the Interest Rate is not fixed for the whole duration of the loan. It is fixed only for a period at the beginning, which is called the initial rate period. After that period is over, the Interest Rate, together with your payments will be adjusted up or down, depending on Interest Rate index movements.
What is an Annual Percentage Rate?
Annual Percentage Rate, also called APR, is a percentage Rate that includes the annual cost of a loan, therefore its interest, insurance, origination fees and rest of the costs related to getting a loan. APR provides the borrower with a very important information about the actual cost of a loan.
How are Interest Rates calculated?
Interest Rates are usually calculated based on Monthly Reducing Balance (the credit is given on a monthly basis) or Yearly Reducing Balance (the credit is given only on a yearly basis, but the EMIs are paid monthly).