life-of-loan cap
life-of-loan cap
The maximum amount an adjustable-rate mortgage can increase. If the initial interest rate is 6.5 percent with adjustments allowed every 3 months, but there is a life-of-loan cap of 5 percent,then the highest interest rate that can be charged will be 6.5 percent plus 5 percent, or 11.5 percent. Also called “lifetime cap.”