Capped rate mortgages are a type of variable rate mortgage, but with one important difference: they have an interest rate ceiling, or cap, beyond which your payments can't rise.
A capped rate is normally only for an introductory period – typically anything from two to five years. They are also the rarest of all mortgage types – most of the time there are only a handful of capped rate products available in the whole market!
Capped mortgages are the only rate type, other than fixed rates, that will give you payment security.
They guarantee that your mortgage payment won't go above a certain level, but because they are a kind of variable rate, they also let you benefit from lower payments when rates go down.
Capped rate mortgages do tend to offer a higher variable rate than the best tracker rates and discounted rates available because you are paying for the security that the interest cap provides. They will usually also make an Early Repayment Charge if you remortgage to another lender or pay off the mortgage in full (although you may be allowed to make overpayments).
Once the introductory capped rate period comes to an end, your mortgage will go onto a lender's Standard Variable Rate or a tracker rate for the remaining term, although you can remortgage to a new deal if you wish.
Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give you advice.
Get friendly, expert advice free of charge as a visitor of moneyfactscompare.co.uk.
Mortgage Advice Bureau have 1,600 UK advisers with 200 awards between them.
Speak to an expert mortgage broker today.
Call 0808 149 9177 or request a callback
Mortgage Advice Bureau offers fee free mortgage advice for Moneyfacts visitors that call on 0808 149 9177. If you contact Mortgage Advice Bureau outside of these channels you may incur a fee of up to 1%. Lines are open Monday to Friday 8am to 8pm and Saturday 9am to 1pm excluding bank holidays. Calls may be recorded.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Our mortgage calculator helps you to see how much your mortgage might cost you each month.
Our how much can I borrow calculator gives you a range of how much a lender might consider lending you under a mortgage. This calculation is only an indication only.
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.