Ledyard's Special Offer 10/1 Adjustable-Rate 30-Year Mortgage

• Fixed rate for the first 10 years.

• Rate adjusts annually for the remaining 20 year term of the mortgage.

What is an adjustable-rate mortgage (ARM)?

• Adjustable-rate mortgages (ARMs), also known as variable-rate mortgages, have an interest rate that may change periodically depending on changes in a corresponding financial index that's associated with the loan.
• Generally speaking, your monthly payment will increase or decrease if the index rate goes up or down.
• Typically, the initial interest rate is lower than that of a comparable fixed-rate mortgage.
• ARM loans are usually named by the length of time the interest rate remains fixed and how often the interest rate is subject to adjustment thereafter. 

Common Reasons to Consider an Adjustable-Rate Mortgage

• You plan to move before the end of the introductory fixed-rate period, so you aren't concerned about possible rate increases.
• You'd like an initial monthly payment lower than a fixed-rate mortgage usually offers.
• You predict interest rates may go down after the initial fixed-rate term of your loan.

Important considerations

Before deciding on an ARM for your mortgage, make sure you understand these key points:

1.    The fixed period is the length of time you keep the initial interest rate, while the adjustment frequency is how often the rate changes afterwards. For instance, a 10/1 ARM will have a fixed rate for the first ten years, and then will adjust once a year after the fixed period ends.

2.    The index is what the lender bases its rate adjustments on, Ledyard National Bank uses the 1 Year Treasury Constant Maturity. The margin is how much the lender will add to the index when adjusting your rate. The total of the two is typically rounded to the nearest 0.125%. For instance, if the 1 Year Treasury Constant Maturity is 5.27% and the margin is 2.875%, the new rate would be 8.125% (8.145% rounded down).   

3.    The ARM terms will include how low the rate can go (the floor), how high your rate can increase the first year after the fixed period ends (the initial cap), how much it can increase with each successive adjustment (the subsequent cap), and how much your rate can increase during the life of the loan (the lifetime cap).

4.    For instance, an ARM with caps of 2/2/6 means:

          2 = The rate will not increase or decrease by more than 2% for the first adjustment after the fixed period ends.

          2 = The rate will not increase or decrease by more than 2% for any subsequent rate adjustments.

          6 = The rate will never increase by more than 6% above the initial starting rate.

Ready to Get Started?

Reach out to one of us with any questions you may have and to learn about current rates.

Ed Bidlack
VP, Senior Residential Banking Team Leader

Tiffany Staples
Residential Banking Advisor

* Rates are subject to change. Note that the monthly payments do not include real estate taxes, homeowners insurance (required), or flood insurance and mortgage insurance, if applicable. Actual payment obligation will be higher. Check with bank for terms and restrictions. Credit and property approval required.  On a 10/1 ARM of 30 years with a loan amount of $400,000.00, a down payment of 20%, and an interest rate of 6.75% (7.260% APR) fixed for the first 10 years, there would be 120 monthly payments of $2,594.39, then 240 variable monthly payments at an estimated 8.125% interest rate and $2,880.57 payment, using a recently available index.  ARM interest rates and payments are subject to increase after the initial fixed-rate period (10 years for a 10/1 ARM).  After the initial fixed rate 10 year period, the interest rate will adjust annually based on the 1 Year Treasury Constant Maturity (the index). As of November 24, 2023 the 1 Year Treasury Constant Maturity is 5.27% plus a margin of 2.875%, rounded to an 8.125% interest rate.