Capped Mortgage

What is a Capped Mortgage?

A capped mortgage works just like a variable rate mortgage, except the maximum increase that can be expected under the agreement is limited to the level of the cap. In this way a capped mortgage combines a variable rate mortgage with an element of a fixed rate mortgage.

Thus, you might expect that interest rates might rise in the not too distant future, but you also want the flexibility of a variable rate mortgage (if for example the mortgage rate drops). The advantage of a capped mortgage where mortgage rates are rising, is that you can be safe in the knowledge that your mortgage will never increase above the level of the cap.

For example, if your cap is set at 5%, and over time, the general variable mortgage rate increases above that level, you will only pay 5% until the capped mortgage level ceases.

If you would like more information on a capped mortgage, please contact us.

Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.