Capped Mortgages

With a capped rate mortgage you pay the standard variable rate but your lender will set an upper rate - or cap. Your interest rate is guaranteed not to rise above this level for the period the cap is in place. You get the best of both worlds, in that the amount you pay will never rise beyond a certain amount for the period of the deal but it could fall if the lender's standard variable rate (SVR) falls during the period. The price you pay for this security is that deals may be less competitive than fixed and discounted rate mortgages. You can cap for a range of periods, from six months to five years.
Has a maximum interest rate for a given term. The interest rate you pay cannot go higher than the agreed capped rate; meaning that you know the maximum amount your monthly repayments could rise too. However, if the basic interest rate falls a capped rate mortgage allows your payments to reduce.