Capped Rate Mortgage Information
A Capped Rate mortgage puts a ceiling on the rate for a period of time. This means that the payments cannot go above the rate set during that time, however they can go down. A lender may also put a Collar on the rate whereby it sets an interest rate below which the mortgage cannot fall.
Advantages:
Gives you a guaranteed rate which your repayments cannot exceed
If interest rates fall your repayments will reduce with them (subject to any �collar�)
Disadvantages:
Usually the Capped rate is higher than a Fixed rate because repayments can fall with interest rates.
Usually have to pay application and/or arrangement fees
If you redeem (pay off) your mortgage during the capped rate period and
often for a period afterwards you may have to pay an early repayment charge.
This will vary from lender to lender- speak to one of our advisers to
see what this would mean to you.
