Variable Interest Rate
Definition
- Percentage paid by a borrower for the use of funds. This interest rate moves up or down periodically due to changes in other interest rates.
Synonyms
adjustable interest, floating, non-fixed, shifting
Alternate Spellings
Variable Rate
Related Terms and Acronyms
- Adjustable-Rate Mortgage (ARM) — Acronym,
- A type of mortgage loan program in which the interest rate and payments may be adjusted as frequently as every month. The principal loan balance or term of the loan may also be adjusted to reflect the rate change. The purpose of the program is to allow mortgage interest rates to fluctuate with market conditions.
➥ A type of variable rate mortgage product. - Prime Rate — Definition,
- The rate suggested by the Bank of Canada on which most banks base their prime mortgage lending rate.
- Rate Index — Definition,
- A table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes for adjustable-rate mortgages and other variable-rate loans.
- Variable Interest Mortgage — Definition, Important,
- A loan where the interest rate may vary during the term of the mortgage. The variance is usually tied to some specific factor such as prime bank rate or the guaranteed investment certificate rate for a designated lender.
- Variable Rate — Definition,
- A floating percentage value that fluctuates based on certain conditions.
- Variable Rate Mortgage (VRM) — Acronym, Very Important,
- Home loan in which the interest rate is changed periodically based on a standard financial index. Also called an "Adjustable-rate Mortgage."
➥ A type of mortgage loan offered by brokers and lenders.
