Capped Rate Mortgage

A capped rate mortgage has an interest rate that, like a tracker mortgage, may move up and down with the Bank of England base interest rate.

However, unlike a tracker mortgage, a capped rate mortgage can potentially offer customers slightly more financial security, as its interest rates will never rise above a certain level.

These ‘capped’.  mortgages are often referred to as capped tracker mortgages.

There are a range of banks and building societies that could offer you competitive capped rate mortgages deals. You might therefore like to compare mortgage offers from a number of different lenders to see which could offer you the most value for money.

Our mortgage comparison tables below contain information about some of the most competitive mortgage deals currently on the market.  You may find these useful as you search for a capped rate mortgage:

Depending on the circumstances, a capped rate mortgage may come with several pros and cons:

Advantages

• Security in the knowledge that your interest rates will not rise above a capped rate, making budgeting easier
• Rates that cannot be influenced by the lender once the mortgage deal begins, making changes easier to predict

Disadvantages

• Capped interest rates could be significantly higher than the equivalent fixed rate
• You may be subject to be early redemption charges
• Capped rate mortgages tend to come with arrangement fees
• Capped rate mortgages tend to be less readily available than standard fixed rate or tracker mortgages, so your choices could be fairly limited.

If you are interested in finding the most affordable capped rate mortgage deal, you may wish to consider the following points:

• Shop around using several different lenders and compare mortgage deals
• Work out how much you could afford to pay each month
• Use a mortgage calculator to assess costs and the viability of a proposed deal
• Get together as much of a deposit as possible