Variable-Payment Plan

Any Mortgage repayment schedule that provides for periodic change in the amount of monthly payments. Changes may occur as a result of: the expiration of an interest-only period (flexible Payment Mortgage) a planned step-up in payments (graduated Payment Mortgage) or a change in the Interest Rate due to fluctuation in an index (variable-Rate Mortgage).
Example: A loan is made with a variable-payment plan. The interest rate on the loan may be adjusted once a year according to a published index. As the interest rate is changed, the monthly payment is adjusted to provide for full Amortization of the outstanding Principal over the remaining life of the loan.