Capped Rate Mortgage

What is a Capped Rate Mortgage?
Capped rate mortgages are based on an interest rate that is guaranteed not to rise over a given period, but which can fall during that period.

What are the benefits of a Capped Rate Mortgage?
Capped rate mortgages are supposed to offer the best of both variable and fixed rate deals. You agree to have a limit - a cap - on the maximum amount of interest you will pay over a particular period of time while allowing it to fall if the variable rate drops.

With a capped rate mortgage you get the best of both worlds. You benefit from falling interest rates but are protected from rate rises. If the variable rate goes higher than your agreed capped rate then you only pay interest up to the agreed capped rate. If the variable rate falls below your capped rate then you pay interest at the variable rate.

Another advantage of a capped rate mortgage is that you always know the maximum you'll be paying.