Guide to Capped Mortgages

Similar to a Fixed Rate Mortgage is a Capped or Collar Mortgage

This is a combination of a fixed and variable mortgage. It means that if the bas rate rises your mortgage rate won’t go above a certain level. However if the base rate falls you can benefit from a reduction in your interest payments. Sometimes these capped mortgages have a lower ceiling as well as an upper ceiling. They seem attractive because it enables a cap on interest payments enabling budgeting, whilst also enabling lower payments if rates do fall. However a lender is likely to charge a premium to make this type of mortgage worthwhile for him.

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