Capped

With a capped rate mortgage you know the absolute maximum you will pay each month. Your mortgage rate can rise but only as high as the capped rate. If base rate continues to rise after you have hit the cap, your mortgage repayments are not affected.

Because the rate is capped rather than fixed, it can also fall so you can take advantage of any reductions in base rate. Capped mortgages therefore give you the best of both worlds.

Capped rates tend to be set for two, three or five years. After this time, you can remortgage elsewhere or revert to your lender’s standard variable rate (SVR).

With a capped mortgage, you pay for the mix of protection and flexibility you get. There are fewer capped rate mortgages than there are fixes or trackers so initial rates also tend to be higher as you have less choice.

If you need certainty and couldn’t afford the mortgage if rates climbed above a certain level, you may be better off with a fixed rate.