Canadian Financial, Real Estate and Mortgage Glossary

Adjustment Period

Definition of adjustment period

Related Terms and Acronyms:

• adjustable-rate mortgage (ARM)   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.
• change frequency   The scheduled period in which an adjustable-rate mortgage adjusts.
• initial interest rate   The introductory interest rate on an adjustable-rate mortgage (ARM), which usually changes at a predetermined time.
• interest rate cap   A limit to the interest rate increases and decreases on an adjustable rate loan; either from one adjustment period to the next or over the life of the loan.
• payment adjustment period   The time period where payments on an adjustable-rate mortgage (ARM) may fluctuate.
• periodic rate cap   In an adjustable-rate mortgage (ARM), it limits how much an interest rate can increase or decrease from one adjustment period to the next.
• rate hold   The length of time, typically between 60 and 120 days, that a lender will guarantee a loan's interest rate once you are locked in.
• rate index   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 rate mortgage (VRM)   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.