Mortgages & Money
  Mortgage Guide

Capped rate mortgages

Interest rates for capped mortgages will not rise above a certain maximum level. This normally applies for a fixed period.

Similarly, a 'collared' rate mortgage will not fall below a minimum limit.

Pros:

  • Offers protection from rises in interest rates, but you could still benefit from a drop in interest rates
  • You can budget, knowing the maximum you will pay for a set period

Cons:

  • Fixed rate may be lower than the cap, and if interest rates fall below the collared rate, you will not benefit
  • Check for penalty clauses. You may be tied to the lender's SVR after the capped period expires


Disclaimer: This material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make any decisions. Always obtain independent, professional advice.

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