Rate Switch Clause Samples
A Rate Switch clause defines the conditions under which the interest rate applied to a loan or financial product changes from one type to another, such as from a fixed rate to a variable rate. Typically, this clause specifies the timing of the switch, the new rate calculation method, and any notice requirements for the parties involved. Its core practical function is to provide transparency and predictability regarding future interest payments, helping both parties manage financial planning and risk associated with interest rate fluctuations.
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Rate Switch
Rate Switch. 44 11. Interest ........................................................................................................................................... 47 12.
Rate Switch. 9A.1 Switch to Compounded Reference Rate Subject to Clause 9A.2 (Delayed switch for existing Term Rate Loans), on and from the Rate Switch Date:
(a) use of the Compounded Reference Rate will replace the use of the SWAP Rate for the calculation of interest for Loans; and
(b) any Loan or Unpaid Sum shall be a “Compounded Rate Loan” and Clause 9.2 (Calculation of interest – Compounded Rate Loans) shall apply to each such Loan or Unpaid Sum.
9A.2 Delayed switch for existing Term Rate Loans If the Rate Switch Date falls before the last day of an Interest Period for a Term Rate Loan:
(a) that Loan shall continue to be a Term Rate Loan for that Interest Period and Clause 9.1 (Calculation of interest – Term Rate Loans) shall continue to apply to that Loan for that Interest Period;
(b) any provision of this Agreement which is expressed to relate to a Compounded Rate Loan shall not apply in relation to that Loan for that Interest Period; and
(c) on and from the first day of the next Interest Period (if any) for that Loan:
(i) that Loan shall be a “Compounded Rate Loan”; and
(ii) Clause 9.2 (Calculation of interest – Compounded Rate Loans) shall apply to that Loan.