What ia a Capped Rate Mortgage?
A capped mortgage is similar to a fixed rate in that it will not rise above a pre-set rate, known as the cap.
However if the lenders standard variable falls below the capped rate your rate will fall in line with it. If the lenders variable rate rises above the capped rate your rate will not rise abovethe capped rate.
Capped and Collared Mortgages
Many capped rate mortgages will have a minimum rate they can fall to known as the collar. As one of the main benefits of a capped rate mortgage is your mortgage payments reducing as interest rates fall, it is important to check the small print of a capped rate mortgage scheme.
Tracker Capped Rate Mortgages
Some mortgage lenders now offer capped rate mortgages which track track the bank of england base rate instead of being linked to the lenders standard variable rate. These tracker capped rate mortgages can be beneficial as they guarantee to fall if the bank of england reduces the base rate. In the event of a base rate change the products rate will typically change after 14 working days.
Your home may be repossessed if you do not keep up repayments on your mortgage
