Adjustable Rate Mortgage (ARM) Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Adjustable Rate Mortgage (ARM), written in plain English, along with examples of how it is used.

What is Adjustable Rate Mortgage (ARM)?

n. also called as variable rate mortage or re-negotiable rate mortgage these are the loans secured on some property whose interest rate and hence the monthly repayment installment vary over time. These are practised where the interest rates are unpredictable thereby making fixed rate loans inapprpriate. The borrower benefits if the interest rate falls and loses out if interest rates rise.