Rate lock is a type of financial agreement. It guarantees a fixed interest rate.
This agreement occurs between a lender and a borrower.
Rate lock differs from variable rate loans. Variable rate loans have interest rates that fluctuate.
Rate locks maintain their rate regardless of market conditions.
Rate locks feature guaranteed interest rates. Borrowers secure these rates for a specific time period.
Common durations include 30, 60, or 90 days. Rate locks also provide predictability.
Borrowers can accurately estimate their future mortgage payments. Another popular feature involves protection against rate increases.
If market rates rise, the borrower’s rate remains unchanged.
Common rate lock features include expiration dates. Most agreements specify when the lock ceases to be effective.
Fees associated with rate locks are also common. Lenders may charge for this financial product.
Flexibility in selecting the lock period exists as well. Borrowers can choose a lock duration that suits their timeline.
Unusual rate lock features involve rate lock extensions. Borrowers can extend their lock period, sometimes for a fee.
Another unusual feature includes float-down options. This allows borrowers to take advantage of lower rates if they fall during the lock period.
Partial lock options represent another unusual feature. Borrowers can lock in a rate for a portion of their loan amount.
Unique rate lock features comprise specific lock-in terms. These terms can vary significantly between lenders in Bangkok.
Free rate locks stand out as unique. Some lenders offer this without an upfront fee.
Customizable lock periods also distinguish themselves. Lenders may offer non-standard durations beyond the typical 30, 60, or 90 days.
Comparing rate lock with similar features highlights its stability. Unlike adjustable-rate mortgages (ARMs), rate locks protect against rising interest rates.
This makes them particularly appealing for real estate investors who prioritize budget predictability over potential savings from decreasing rates.
For further details and terminology clarification, please refer to our glossary about Bangkok real estate.