Capped rate mortgages — more information
There are basically two kinds of underling
mortgage arrangement to any contract:
1. Interest only
2. Principal and interest
Compare UK capped rate mortgage interest rates online
This page is designed to give the "pros and
cons" of capped rate mortgages . If you want to compare
your mortgage, or look at the possibilites for a new mortgage
on capped interest, click here:
Capped rate interest arrangements are an interest
repayment variation on a basic "principal and interest"
approach.
Capped rate mortgages say they are the best
of both worlds - variable and fixed rate.
There is a limit - or cap - on the maximum
interest payable over time while allowing for a fall if
the variable rate drops.
Pros: If the variable rate goes higher than
the capped rate then payments stop at the agreed cap . If
the rate varies below the cap, payments reduce.
Cons: A moment's thought will reveal why these
mortgages cannot be made very competitive. The interest
rate must be set higher than the average fixed or discounted
rate mortgage, in order to cover the lenders exposure.
The lender's administrative charge of say,
£95 to £200 is added on top, although the presence
of a cap in times of rising rates could easily justify spending
this amount.
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