Capped
Capped rate mortgages offer the best of both variable and fixed rate deals. You agree to have a limit - a cap - on the maximum amount of interest you will pay over a particular period of time while allowing it to fall if the standard variable rate drops.
If the variable rate goes higher than your agreed capped rate then you're only paying up to the agreed capped rate. Whereas, if it falls below your capped rate, you pay the lower variable rate. So you benefit from falling interest rates but are protected from rate rises. You know the maximum you'll be paying.
However, the Capped rate is often set slightly higher than the equivalent Fixed Rate deal. You take the risk that if rates rise you would have been better off with the Fixed Rate product, however if rates fall you win.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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The Financial Services Authority does not regulate some forms of Mortgage.
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