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3.5.5 Interest rate

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The capped interest rate on a further advance is that interest rate or interest rates that applied to the last advance or advances that preceded the application for further subsidised assistance, but disregarding the 1.5 per cent reduction off the Benchmark Rate (the 'Reduced Benchmark Rate') provided for in section 35AA of the Act.  Having set that rate as the capped rate to apply to the further advance, section 35AA is then applied if that rate exceeds the 'Reduced Benchmark Rate'.  The certificate of entitlement is to contain a statement setting out the effect of section 35AA.

Where the last advance was a tiered loan which had been discharged before 5 January 1998, the capped interest rate on any further advance is to be the 'collapsed effective rate' of that loan in accordance with Sub-section 34(2A) of the Act, again disregarding the 1.5 per cent reduction off the Benchmark Rate (the 'Reduced Benchmark Rate') provided for in section 35AA.  Having set that rate as the capped rate to apply to the further advance, section 35AA is then applied if that rate exceeds the 'Reduced Benchmark Rate'.  The certificate of entitlement is to contain a statement setting out the effect of section 35AA.