Front-loaded mortgages feature a deeply discounted rate for an initial “teaser” period—often 6-12 months. After that, the mortgage reverts to a higher rate.
Lenders in the past have offered 5-year front-loaded variable mortgages where the first year is at prime – 1.00%, for example, followed by prime – 0.60% in years 2-5.
Front-loaded variables are popular with borrowers who want the lowest rate possible for 6-12 months, knowing that they plan to lock into a fixed rate thereafter.
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Last modified: May 27, 2009
