Reverting Rate and Comparison Rate: What You Need to Know
A mortgage has several elements. Some loans have an introductory period that expires. Others have a fixed rate that expires. When the starting interest rate expires before the mortgage reaches its full term, the loan encounters the reverting rate. The reverting rate becomes the new interest rate if the homeowner takes no action. Sometimes homeowners can speak with their lender and maintain the introductory rate or fixed rate. Otherwise, the homeowner will begin paying the reverting rate.
The reverting rate denotes the new rate or the standard variable rate. In many cases, it causes a jump in the monthly repayment amount for homeowners. Often, the homebuyer finds out about the impending interest rate hike during the application process. Lenders make the comparison rate available to homebuyers.
The comparison rate takes into account the fees that a mortgage incurs. Thus, it’s higher than the interest rate. For example, Mortgage House offers the Advantage 4 Years Fixed home loan. The mortgage has a fixed rate period of four years. Thereafter, the rate will revert to the standard variable rate. This loan carries an interest rate of 4.19%. It also has a comparison rate of 4.32%.
The reverting rate applies to the car loan too.
To further decipher the elements of a home loan, Mortgage House loan specialists make themselves available to clients.
Reverting Rate and Comparison Rate Conclusion
The reverting rate applies to home loans when the introductory rate or the fixed rate expires. This impacts the comparison rate. Loan specialists at Mortgage House outline the most important elements of their mortgage terms. Contact our team today.