Effect of new interest rate on variable-rate-mortgage between payments?

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Building a financial analysis tool for client. On a variable rate loan, when a new interest rate takes effect, does it cause the interest accrual [rate the balance creates interest] to be recalculated between payments

I’m interested in whether it changes the rate at which interest is accrued between payments. Or is the interest rate only allowed to change the accrual rate after the next payment?

My question is particular to Canadian Mortgages, but feedback with respect to any similar financial instrument is helpful.

  1. Reply
    April 30, 2011 at 12:31 am

    The interest is only calculated for each payment, not between payments, but the actual rate can either be an average of the rates during the last period or the official rate at a given date. So the interest is only calculated at the end of a period, but if an average rate is used even changes that occurred during the period are taken into account.

  2. Reply
    ducos chesla
    April 30, 2011 at 1:24 am

    Amazing! Good Luck, cheers http://u96.info/financial-instrument

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