Real Estate Glossary

What is Initial Interest Rate?

The interest rate at which a loan or mortgage begins. The initial interest rate is usually lower than the fully indexed rate, which is the rate that takes into account the current market rate and any adjustments made over time. The initial interest rate is often used to attract borrowers, and is typically a promotional rate that is only available for a limited time. The initial interest rate can be fixed or adjustable, and can have a big impact on the overall cost of a loan or mortgage. It's important to consider the long-term implication of the initial rate if it's adjustable, since the rate may increase over time and affect the overall monthly payments.