Capped rate mortgage

A capped rate mortgage allows homeowners to cap the level of interest that they repay during the length of their mortgage. When the variable rate (the interest rate determined by the Bank of England) exceeds it, the owner will only pay up the capped rate that has been agreed.

However, the interest rate for capped rate mortgages is often higher than fixed rate agreements. A mortgage lender may also charge an administration fee in order to make this interest payment variation.