A capped mortgage is a variable rate mortgage with a capped limit beyond which the rate paid will not exceed.
Mortgages are available in a number of different interest rate options, one of which is the capped rate.
A cap means that there will be a limit to any increase in the variable rates for a selected term. The mortgage rate charged on your account can not exceed this rate. However if the variable rate drops below your capped rate you will benefit, as your repayments will be calculated using the lower variable rate. Capped mortgages enable you to place a limit on your monthly mortgage commitments and still benefit from falls in interest rates.
Capped rate mortgages put a limit on the highest rate of interest you will have to pay on your mortgage over an agreed introductory period. This means you're protected to a certain extent if interest rates rise, and if they stay low you will still benefit from the lower interest rates. It's basically a combination of the fixed rate mortgage concept with a standard variable rate mortgage, allowing you to profit from decreasing interest rates.
A capped rate mortgage is a variable rate mortgage which has a fixed upper rate limit. This means that the borrower knows in advance the highest monthly payment that he may have to make.
One advantage of the capped rate mortgage is that when interest rates are likely to rise, they offer protection for borrowers against repayments going over a certain level. This can be seen as being almost as attractive as a fixed rate mortgage. Having a capped rate mortgage can make it easier to budget when you know what the highest amount your mortgage payment could be.
Be aware that this type of mortgage usually charges redemption penalties to those who wish to swap mortgage provider.
Capped rate mortgages are generally a compromise between fixed rate and variable rate mortgages.
Whilst providing peace of mind capped rates are generally more expensive than fixed or discounted rate products.
You may freely reprint this article provided the author's biography remains intact:
About The Author
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.
Home equity loans are often touted as being the solution... Read More
A problem that often arises when people try to refinance... Read More
Taking the step for prospective home buyers.into home ownership is... Read More
A mortgage is borrowing money using property as a security,... Read More
Buying a home with bad credit is possible with the... Read More
A new survey reveals that in the last five years,... Read More
The best way to explain why a mortgage professional is... Read More
There are numerous reasons a person has bad credit. Late... Read More
If you fall behind in your mortgage payments, you face... Read More
Here are some mortgage tips that can help you obtain... Read More
Getting a home loan with bad credit has actually never... Read More
Anyone who borrows money is always looking for the cheapest... Read More
You are comfortably wedged in a mortgage deal, paying the... Read More
For the last two years, interest rates have been much... Read More
Here is a useful guide to the different types of... Read More
Online mortgage companies make refinancing convenient and competitive. By researching... Read More
Mortgage Debt Elimination shows that most home loan debts will... Read More
What's the most efficient way to secure a US Commercial... Read More
Finding a good lender to help you with refinancing your... Read More
When you begin your search for a new home loan,... Read More
The real estate market in California is booming. Home values... Read More
A pension mortgage may seem lucrative at the first sight.... Read More
There are great mortgage loans for people with poor credit,... Read More
Interest rates are at an all time low, making now... Read More
In decades past, most people who were interested in obtaining... Read More
This post is a must read for anyone considering purchasing... Read More
In today's overheated housing market, lenders are making it easier... Read More
According to the Council of Mortgage Lenders, first-time buyers are... Read More
If you've got a wallet full of credit cards, and... Read More
Mortgages are easy as long as you understand them well.... Read More
Here is a useful guide to remortgages. What is a... Read More
'Flexible mortgage' is a term that's used a lot, but... Read More
Finding the best mortgage lender online is simply a matter... Read More
Think About the Long Term. Estimate how long you expect... Read More
Have you heard about or been interested in finding out... Read More
As your home appreciates in value, you gain equity. You... Read More
The decision to buy a home in Florida can be... Read More
When the bills are piling up and there doesn't seem... Read More
Sub-prime mortgages are not that much different from average mortgages.... Read More
If you as an investor understand the process, you will... Read More
It is a common financial scenario across households in the... Read More
Slight increases in the interest rates raise your hackles. Tension... Read More
Mortgage rates are rising and it's becoming more difficult for... Read More
Homeowners facing foreclosure should be aware of unscrupulous lenders and... Read More
In other words, the benefit of the loan must outlast... Read More
If you are looking to refinance in New York, it... Read More
To make needed repairs to your home without the advantage... Read More
Do you want a mortgage loan for your new home?... Read More
When trying to obtain the best mortgage rate compare offers... Read More
If you in the process of looking for your first... Read More
Mortgage Refinance Mortgage Refinance |