Rates can change, and the maximum interest rate is normally high.
Initially for the first 12 months, the minimum payment is calculated using the start rate, the amount you borrow and the loan term. In most cases, you can also make additional principal payments which reduce the amount you need to pay in later months. The Minimum Payment on your loan, which is fixed for your first 12 monthly payments, is initially based on the amount you borrow, the term you select for your loan and the interest rate the start rate specified in your commitment letter. The minimum payment adjustment period is usually set to 12 months, unless negative amortization limit is reached. The sum of the margin and the most recent index figure available prior to a scheduled interest rate change date. The 1st Standard 5-Year Recast occurs when the 61st payment is due.
Your payment is calculated each month based on the prior month's fully indexed rate, loan balance and remaining loan term. The payment will cover the interest as it accrues each month. The 1st interest rate change date may occur when the 37th payment is due. Subsequent payment changes may occur each 12 months thereafter.
After the introductory period, your statement will give you up to 4 payment options each month, allowing you to choose which one works best for you. Homes and Investment Properties also available with minor adjustments. After that, the payment changes annually, and a payment cap limits how much it can increase or decrease each year.
Every 12 months your Minimum Payment can change, it also can change if your loan needs to be recast.