Most variable interest home loans don’t have a maximum interest rate (some going up to 25%). Luckily, most lenders will often cap their interest rates. An interest rate cap limits how high your interest rate can rise on a variable rate mortgage. Caps are structured to help limit incremental increases in the rate of a loan. An interest rate cap helps benefit borrowers in a rising interest rate environment, making the product more financially viable and attractive for customers. Interest rate caps also give customers protection against dramatic rate increases, providing a threshold for maximum interest rate costs. The maximum interest rate of a variable home loan depends on how your lender customises and structures the interest rate cap.
Do variable rate home loans have a max interest rate?
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