Capped Rate Mortgages - Cheap Mortgage Deals

This product is a bit more complicated as they are a compromise between fixed rate and a variable rate mortgage.

There is a fixed upper limit to the amount of interest that will be charged on your mortgage and if the base rate falls the interest charged on it will remain in line with it and will also fall. This means that capped mortgages combine the most attractive aspects of a variable and a fixed rate mortgage.

The cap will not remain for the entire term of your loan, it should last for 5 years or more if you want to commit for that long. They are worth considering if the interest rates are rising rapidly or when there is an amount of uncertainty about which way they will go.

Although this mortgage is a cautious choice its rates tend not to be as competitive as those for fixed rate or discounted products. Lenders do this to ensure their losses will be minimised if the base rate rises sharply. If the rates do go as high as or above the level of your cap, fixed rates tend to be a better deal and if rates drop below the cap and stay there a discounted rate would probably be a cheaper option.

Capped mortgages are a safe choice because they offer protection against rising interest rates and are good for applicants who are on a tight budget. Unlike a fixed rate product you will also benefit from any fall in rates. They are available with introductory offers on discount periods if you prefer to pay less initially.