- payment options
- repayment mortgage
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- mortgage types
- standard variable rate
- fixed rate
- capped rate
- discount rate
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- cash-back
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- 100% mortgage
capped rate
What is it?
A capped rate mortgage is a kind of variable rate mortgage but with a specified upper limit, or cap, above which the rate cannot go during the offer period. The capped rate typically applies for a period of up to three years.
The capped rate is usually lower than the standard variable rate, but this kind of mortgage is not usually as competitive as a fixed or discounted deal.
What does it offer?
A capped rate mortgage can offer a degree of protection against future rate rises whilst enabling you to benefit from any falls in interest rates.
When is it worth considering?
A capped rate mortgage may be worth thinking about if there is uncertainty about interest rates, or if rates are rising rapidly.
What should I be aware of?
With some capped rate mortgages - even if rates go down - your mortgage will not follow beyond a certain point or ‘collar’.
There may also be early repayment charges which could extend beyond the period when you are paying the capped rate.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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