Capped mortgages are very similar to fixed-rate mortgages, in that the interest rate will not exceed a pre-set rate, known as a 'cap'.
With a capped rate you pay a variable interest rate, but there's a ceiling or 'cap' so your payments won't go above a certain amount for a set period. However, if the standard variable rate of the mortgage falls below this capped rate, your interest rate repayments will come down in line with it.
Most capped rate mortgages will also have a minimum rate set to which they can fall. This is known as the 'collar', if the standard variable interest rate falls below the collar however, you will pay no less than the rate at which the collar has been set so you could lose out in this situation.
Capped rate mortgages provide peace of mind for the borrower because they guarantee that interest rates will not rise beyond a certain pre-agreed limit during the capped rate period.
At Professional Mortgage Services we will review your requirements to establish which lender is offering the best product based upon your individual needs.