Capped Rate

How it works
Your payments are variable and often linked to a base rate, but fixed not to go above a set level (the 'ceiling' or 'cap') during the period of the deal. At the end of the period, you are usually charged the lender's standard variable rate.

Early repayment charge?
During the special deal period -Yes, with most loans
For some time after the end of the special deal - Yes, with some loans.

Is it for you?
Yes, if you like to know the maximum you will pay over a set period.
Yes, if you think mortgage interest rates might rise above the cap.
Yes, if you want the security of knowing that your payments can't rise above the set level, but still have the chance of benefiting from any falls in interest rates.
No, if you can find a fixed rate set at a lower rate than the cap and you think rates are unlikely to fall below the level of the fixed rate deal.

 

Your property may be repossessed if you do not keep up repayments on your mortgage.

The Financial Services Authority (FSA) does not regulate some forms of mortgage.

The information set out on this page is intended to provide a general appreciation of the topic and it is not advice. Guidance should be sought from a specialist who is qualified to advise in your specific circumstances.

For more information on any aspect of mortgages please contact Surrey Financial Advice on 01483 211800 or email us at admin@surreyifa.co.uk  We will be happy to assist you.