UK Capped Rate Mortgage

The UK capped rate mortgage has a maximum interest rate for an agreed period. Interest cannot be applied to the loan higher than an agreed cap rate, but may vary beneath the cap following the normal market fluctuations in the lenders standard variable rate. A variant of the UK capped rate mortgage is called a cap and collar mortgage, where the interest rates never exceed a maximum interest rate (the cap or ceiling ) or falls below a minimum (the collar or floor). At the end of the period the interest rate revert to the lenders standard variable rate.

Benefits of a UK Capped Rate Mortgage

You know the mortgage interest payment will not increase above the capped interest rate over an agreed period, which can help with budgeting.

For a UK capped rate mortgage, if the basic interest rate falls below the capped rate, your repayments will also reduce allowing you to take advantage of favourable economic climate

Risks of a UK Capped Rate Mortgage

For a cap and collar mortgage if the basic interest rate falls below the collar, you will be paying more than necessary.

For further advice and to talk to a mortgage adviser about arranging a UK Capped Rate Mortgage just click on the enquiry button below, fill in brief details, and an adviser will call you within the next 24 hours.