What is a Capped Mortgage?

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.

---

Basic Tips for First Time Home Buyers

The first time you purchase a home is an exciting... Read More

Gearing Up for Bad Credit Mortgages

Mortgage would have never happened, had mortgages been a no... Read More

Online Mortgage Loan Companies Are Convenient

There are many reasons to use the internet to take... Read More

The Best Way To Get The Right Mortgage

Are you thinking of buying a home? If so, then... Read More

Choosing The Right Buy-To-Let Mortgage

Buy-to-let took off during the 1990s with the increasing availability... Read More

Home Mortgages: Does It Ever Make Sense to Pay Points?

Interest rates on home mortgages are often quoted with and... Read More

The Worst Way to Shop for a Home Mortgage

You've found a house that is perfect for you. It... Read More

Home Equity Lines of Credit - the Basics

A Home equity line of credit is a loan which... Read More

Option One Mortgage Loans ? Getting an Option ARM or Option One Mortgage Loan

Have you heard about or been interested in finding out... Read More

Home Loans and Mortgages ? Beware of Deed Theft Scam

The average home in the United States has a value... Read More

How To Find A Mortgage With Bad Credit

Shopping online for mortgages ought to be trouble free, even... Read More

Refinancing Your Mortgage Can Really Save You Money

Refinancing a mortgage is simply taking out a new mortgage.... Read More

2nd Mortgage Loan After Bankruptcy - Get Approved Online

A 2nd mortgage loan after a bankruptcy is possible in... Read More

Homeowners? insurance: The mortgage connection

A home owners' insurance is the cover for the house... Read More

First-time House Buyers: to Buy or Not to Buy; that is the Question

Buying your first house is always a difficult time. There... Read More

Real Estate Lender - Get Approved For a Mortgage Loan Online

Real estate lenders now offer mortgage loan quotes and application... Read More

A Guide to Quick Homeowner Loans

The search for quick homeowner loans can seem futile at... Read More

Secured Lending - a Guide to Releasing the Value in Your Home

The recent boom in house price values have made some... Read More

Why Choose a Home Equity Loan?

There are many reasons for choosing a home equity loan.... Read More

Financial Rebirth Through Remortgage

Seldom in ones life do we get a chance to... Read More

Mortgage Reduction Solutions

USA ECONOMIC CONDITIONSToday's sluggish economy has left millions of people... Read More

A Guide to Finding the Cheapest Home Improvement Loan

To find the cheapest home improvement loan that you can,... Read More

Getting The Best Rates On Mortgages And Loans

With an impending up-grade to the family due in a... Read More

No Fee Mortgages Coming Soon

Buying a home, especially for the first time, can be... Read More

Mortgage Loan Information - Know The Basics When You Refinance or Purchase a Home

If you are currently looking for a new home, chances... Read More

Decision Time: Home Equity Loan or Home Equity Line of Credit?

Home equity loans and home equity lines of credit continue... Read More

Who Could Benefit From A Reverse Mortgage?

What is a "Reverse Mortgage?"Also known as a Home Equity... Read More

Jacksonville Florida Real Estate Mortgage Home Loans - Get the Best Rate Everytime

There are hundreds of mortgage companies in the Jacksonville real... Read More

Mortgage Prepayment Penalties - Just Say No

One of the most common terms found in a new... Read More

Are You Ready for a Home Mortgage Loan?

Buying a Home and committing to a Mortgage can be... Read More

Should You Refinance?

There are several reasons that might make someone consider refinancing... Read More

Remortgage Serves To Rewind The Reimbursements Of Mortgage

It takes a mighty big effort to secure a home... Read More

How to Find a Good Online Homeowner Loan

A quickly growing trend in lending is the online homeowner... Read More