Capped Rate Mortgages
A capped rate mortgage has a ceiling on the interest rate that the lender can charge over a period of time. The interest rate is still variable, meaning it moves up or down in line with the base rate, however the interest rate will not above the capped rate.
This type of mortgage is very good if you have no idea if the base rate will go up or go down. A capped rate mortgage still gives the benefits if the base rate goes down, unlike a fixed rate mortgage. The capped rate does mean tt you are protected if the base rate goes above the capped rate.
Most capped rate mortgages have fees that are chargeable at the start of the mortgage and they also have early redemption penalties if you wish to pay the mortgage off early or change the mortgage to a new lender.
