Who should consider a Capped Rate Mortgage
A Capped Rate mortgage will be more suited to some borrowers than others. If you are worried about the possibility of an interest rate rise and the effect it will have on your monthly payments but at the same time you want to take full advantage of any drop in interest rates then a Capped Rate mortgage has been designed with you in mind.
Acts Like A Fixed Rate Mortgage With variable Rate Mortgage Features
No mortgage choice is ever completely straight forward and it will always depend on personal circumstances and preferences. One personís fears will not necessarily be shared by another borrower and the possible pay backs of risk taking will be more attractive to some then others. Thatís why there is so much choice in the mortgage market and so many options available. The Capped Rate mortgage has been designed to make the most of the advantages of a Fixed Rate mortgage in that it gives a cushion of certainty to future payments and at the same time includes the attractive feature of a Fixed Rate mortgage in that it can move down to lower payments when interest rates drop.
For borrowers who want to limit the risk of interest rate increases by the Bank of England a Capped Rate mortgage offers a tidy solution. To be protected against rises no matter how large is an advantage that many are willing to pay for. It means that future planning is made easier and if the amount that can be repaid is fixed by your circumstances then itís good to know what those payments will be.
A Capped Rate mortgage can be a little more difficult to find than some other types of mortgage and there will be other considerations around the loan.
A Possible Solution
Any borrower thinking of taking out a Capped Rate mortgage should fully investigate the fees and penalty clauses attached to the mortgage before they commit. With these elements taken into consideration the Capped rate mortgage can offer a perfect solution for borrowers who want to mix the best of a Fixed Rate mortgage with the opportunities that a Variable Rate mortgage offers.