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Capped Rate Mortgage and Remortgages

Capped Rate Mortgages

This kind of arrangement is not seen as often as some might wish.

As the name suggests, the interest rate is capped (it has a ceiling on it ) so that the borrower's monthly payments will be calculated using either the standard variable rate or the capped rate, whichever is lower.

A capped rate mortgage is normally capped for a set period of time of between 1 year and 5 years.

On the face of it, it looks like the borrower wins out no matter what happens! In reality the cap is set at a level that the lender does not expect the variable rate to exceed for too long. If they didn't do this they could lose out quite heavily.

 

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Capped Rate

Capped Rate Mortgage


 

 

 

 

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