What happens after to the fixed rate period?
It sounds like rates can still change a lot once the initial fixed period ends but there are usually both annual and lifetime maximums, or “caps”, on how much the rate can change. With the 3/1 Orange Mortgage, the rate can adjust – up or down – a maximum of 2% annually after the fixed term ends, and 6% over the life of the loan. On our 5/1 or 7/1 Orange Mortgage the initial rate can adjust – up or down – a maximum of 5% in the first year after the fixed term ends, and then 2% annually with a maximum, or cap, of 6% over the life of the loan. The important thing to remember is that your rate can go up, down or stay the same. It can change annually after the fixed period only if the 1-year Treasury Bill changes.