- payment options
- repayment mortgage
- interest-only mortgage
- combination mortgage
- mortgage types
- standard variable rate
- fixed rate
- capped rate
- discount rate
- tracker rate
- cash-back
- flexible
- offset
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.
