Lawful Interest | Propertylogy

Lawful Interest

By on August 23, 2018

Lawful interest refers to the maximum interest rate that the law allows a lender to charge a borrower.

When interest is charged that is higher than the lawful interest, it is considered as illegal.

The legal term for this is usury.

Sometimes, when borrower sign up for adjustable rate mortgages, the lender might include an interest rate adjustment cap on the loan.

This is to prevent borrowers from being victimized by interest rate hikes in the financial markets.

This interest cap is seldom triggered.

The lawful interest has a high ceiling than the adjustment cap. So one can imagine how high the lawful interest limit is.

Lawful interest is not to be confused with the legal rate of interest.


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