With a capped mortgage an upper limit to the interest rate you will pay over a given period of time set. So if the Bank of England base rate climbs above the capped rate you will benefit. But if it falls below the capped rate you'll just be paying what everyone else is paying.
Capped rates tie you in to the mortgage for a set period of time which is usually between 1 and 5 years, although it is a possibility that the duration of capped mortgages may be extended as some see them as as a means of stabilising the housing market, so we may be seeing more capped rate mortgages in future.
Capped rates give you part of the advantages of fixed rates and of variable rates. Again, you'll have to give something back for this. For example, the capped rate is likely to be higher than any fixed rate you can get. Like fixed rates, they make good sense for those on tight budgets who need to ensure that their monthly payments don't rise too far.
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