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Capped Rate Mortgages

A capped rate mortgage is very similar to a fixed rate mortgage, in that there is a maximum interest rate set for a given period of time, and the rate you pay is guaranteed not to go above that rate for the agreed period.

However, with a capped rate mortgage, should the Bank Rate fall during that period the rate you pay for your mortgage will 'track' the interest rate downwards, reducing your mortgage repayments.

Pros and cons of capped rate mortgages

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Pros and cons of capped rate mortgages

Capped rate mortgages protect you from rises in interest rates, while allowing you to benefit from any falls in rates. So they offer a win-win situation.

Like a fixed rate, a capped rate mortgage will come with a fee.

The main drawback is that capped rates are few and far between; not many lenders offer them, and when they do they are not available for long.

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