Capped Rate Mortgages
A capped rate mortgage is mortgage that allows you to take a loan out which provides you with some level of flexibility and a level of certainty. Capped rate mortgage lenders will generally offer you a variable rate at the beginning of your mortgage application and a capped interest rate should interest rates increase.
How do capped rate mortgages work?
The idea behind a capped rate mortgage is to protect you if the Bank of England decides to increase the base rate which in turn affects the rate of interest. The mortgage lender will let you know what the capped rate will be, so if interest rates exceed that rate you are not affected during the term of your mortgage. Equally, if the Bank of England reduce interest rates then you would normally qualify for lower monthly payments.
The advantages of capped rate mortgages?
With capped rate mortgages you can take advantage of the fluctuations in the market but at the same time know the maximum your monthly mortgage payments can be.
The disadvantages of capped rate mortgages?
Not every lender can offer this type of product and when you compare this mortgage type to others they may not seem as attractive, you will generally start your mortgage term with a higher variable rate in comparison to a standard fixed or discounted mortgage.
Some lenders may charge some level of administration or set-up fee to take out this mortgage product. The fee generally varies and can be as low as £90.00 to £200.00.
How do I apply for a capped rate mortgage?
Capped rate mortgages are available through many high street providers, and specialist brokers. If you are looking to take out a capped rate mortgage product then complete our simple mortgage enquiry form below and we will put you in contact with a FSA regulated mortgage broker that meets your requirements.