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The Mortgage Point
Capped Rate Mortgages
Capped rate mortgages offer homeowners protection as the interest rate will not rise above a certain level for the life of the product. So while the interest rate on a capped mortgage can go up and down, it will not go above an agreed level.
Periods associated with capped rate mortgages are often similar to fixed rate deals, usually up to five years. Many people who opt for this type of product are keen to take advantage of any drop in interest rates, resulting in reduced monthly mortgage repayments. However, they also need the security of a cap to allow them to budget properly in the knowledge their repayments will not increase above a certain level.
Once your capped rate mortgage product comes to an end, you will be switched over to a variable rate, at which point your monthly payments may rise if the rate at the time is higher than your previous cap. The shorter the life of the product, the lower the interest rate you are likely to pay, although with a deal that only lasts a few years you’ll need to think about remortgaging more often.
Before deciding whether a capped rate mortgage is the best option for you, make sure you speak to one of our lending experts here at The Mortgage Point. They are qualified to provide impartial advice and will help you choose from over 3,000 mortgage products currently available in the market, making sure you make the right choice and get the best possible product available.