Adjustable rate mortgages are not the best proposition for all prospective home buyers, but for those who are aware of the implications, they may be well suited to meeting their requirements. An extract from an informative article about these types of mortgages is reproduced below:
"Sometimes people are surprised, by the relatively low interest rate, advertised for adjustable rate mortgages.
Adjustable rate mortgage loans frequently have low rates applicable in the short term. However, they are subject to fluctuation as market rates change, because of which they may move upwards or downwards.
Variations in market rates mean that it can be difficult to accurately assess your outgoings, with an adjustable rate mortgage. Some types have limits, beyond which the interest rate cannot increase, but this may be for a specified term after which market rates apply.
It is essential that those who sign up for an adjustable rate mortgage, are aware of their obligations, and choose the right type suited to their personal circumstances. Because they can be risky, and somewhat indeterminate, it is necessary to be sure that you can afford to cover possible interest rate changes."
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