Jason Bailey

Expertly compared by Jason Bailey

Products Updated October 12, 2021

 

Compare Capped Rate Mortgage Deals and Offers

We’ve displayed and compare all the capped rate mortgage products available on the market today. See each product side-by-side and then use the comparison tools to compare capped rate mortgages against other deals across all the lenders.

 

Free mortgage advice and brokerage service. Our experts can find you the perfect deal from thousands of products & exclusive deals:

Your home may be repossessed if you do not keep up repayments on your mortgage.

Results:1 providers expertly compared:

Lending Expert

Why?

This provider is our Expert’s Choice in its category as it won tops marks for the following.

  • TRUST
  • VALUE
  • EXPERTISE & KNOWLEDGE
  • CUSTOMER SERVICE

Learn more about how we review and assess the providers here on Lending Expert.

LTV
60% - 100%

Initial Rate
1.19% - 4.32%

Standard Rate (SVR)
3.94% - 4.79%

APRC
3.6%

Type
Variable & 3 ,5 & 10 Fixed Rate

Rated 4.9/ 5

All credit types

The mortgage experts at First Choice Finance can quickly assess your requirements and search the market place to find you the perfect mortgage deal. Click get a quote to make an enquiry today.

Read our customer and visitor reviews for this product:

Rating: 4 / 5 with 2 votes

Simple application process

by K Wheeler

Simple application process - broker was kind and offered advice.

Quick search

by James Hilton

This is a quick mortgage search facility and shows many lenders across the market. Impressed with the level of detail on each product.

Start Your Capped Rate Mortgage Application Today With Lending Expert!

A capped rate mortgage is a home loan which has a maximum limit on the interest rate which is built into the loan. This cap is usually based on a benchmark interest rate defined by a national bank. 

Capped rates can be better for both the lender and the borrower as, for the lender, they offer the opportunity to earn a higher return when rates are low, and for the borrower, they reduce the risk of rising interest rates.

Like fixed-rate mortgages, they offer a degree of payment security as they guarantee that your mortgage payment will not exceed a certain level. However, like variable-rate mortgages, they let the borrower benefit from lower payments when rates do go down.

Lending Expert is a capped rate mortgage broker and can compare over 1,000 mortgage deals across the UK. Whilst high street banks can offer capped rate mortgages too, we can help find the best option for you with rates from 1.39% per month, whether you are looking for interest only, fixed, variable, tracker or have a bad credit history.

Start by clicking on ‘Check my Eligibility’ below and enter some basic details about you and your property – and Lending Expert will be able to help you find the best capped rate mortgage according to your requirements. 

 

Key Features

  • Interest rate capped at a certain upper limit
  • Limited introductory period – typically 2-5 years
  • Free tool to compare capped rate mortgages

 

What Is a Capped Rate Mortgage?

Capped rate mortgages are a type of variable rate mortgage but with an interest rate which has a maximum limit, meaning that your payments cannot rise above this cap. 

This capped rate is usually only for a temporary introductory period which typically extends anywhere between two to five years. Once this period comes to an end, your mortgage will shift to a lender’s Standard Variable Rate or a track rate for the remaining loan term.

They provide an element of payment security as, although your monthly repayments will vary from month to month, they will never be able to go above a certain level.

Because they are a type of variable rate loan, they allow the borrower to benefit from lower payments when interest rates drop.

Typically, capped rate mortgages offer a higher variable rate than other rates, such as tracker and discounted, because you are paying for the extra level of security that is provided by the interest cap. Additionally, there is usually an early repayment charge incurred if you repay the mortgage in full or remortgage to another lender.

 

How Much Can Capped Rate Mortgages Save You?

capped rate mortgages could potentially work out as being extremely cheap, especially during periods of generally low interest rates. However, capped rate mortgages are always at the mercy of the lender meaning that if they change their standard variable rate, this could drastically change how much interest you are paying. 

Between the lender and the borrower, there is an agreed discount rate. However, the standard variable rate can change at the whim of the lender. 

Usually there is a specific set rate which the lender cannot fall below. According to 2018 statistics from Moneyfacts, around a quarter of all capped rate mortgages had this set rate. These ‘collars’, as they are called, might be set at the initial rate of when you first took the deal. This means that you will not benefit from any future decreases in the lender SVR. 

On the other hand, the majority of discount deals have no upper cap meaning that should the lender raise the SVR, your payments could increase significantly.

 

What Areas of the UK Does Lending Expert Cover as a Capped Rate Mortgage Broker?

We proudly offer capped rate mortgages across the entire UK, Scotland and Wales including Birmingham, Brighton, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester, Nottingham, Newcastle, Sheffield and more.

 

How Much Can I Borrow From a Capped Rate Mortgage? Can I Get a Capped Rate Mortgage?

Speak to an expert today in order to find out how much you can borrow from a capped rate mortgage.

 

Can I Get a Capped Rate Mortgage?

  • Aged 25 to 85 years’ old
  • Minimum income of £25,000 per year
  • Good credit status 
  • Strong financial record (limited defaults, arrears)

 

Larger deposits will usually result in paying lower rates overall, since you have paid off and own more of the property. Putting down a higher deposit may also be a requirement for those individuals with limited financial records or weaker credit ratings.

 

 

Factors To Consider Before Taking Out a Capped Rate Mortgage

Before taking out a capped rate mortgage, it is important to consider the following factors:

 

  • Long-term budgeting – capped rate mortgages provide more stability than typical variable-rate mortgages 
  • Standard interest rates – if interest rates rise, you will not go above a certain cap; however, your monthly repayments can go up and down within this limit
  • Introductory period – the capped rate will only last for a limited period (usually 2-3 years) before returning to the lender’s standard variable rate
  • Higher fees – you may need to pay higher rates initially than for a fixed or discounted mortgage and may incur early repayment charges

 

Make an enquiry from our team of experts to find out more about your eligibility for a capped rate mortgage.

 

Is a Capped Rate Mortgage the Best Option for You?

A capped mortgage can be good for those looking to benefit from lower interest rates in some months, but who want the security of the cap to stop their monthly payments exceeding a certain amount.

Those individuals who are risk-averse, will find more security from capped rate mortgages than they would from a typical variable-rate mortgage. With a capped interest rate, the interest rate for the mortgage can never go over a certain limit even if the standard variable rate exceeds this.

Being able to control monthly outgoings will help borrowers to control their finances and budget in the long-run.

That being said, even with a capped interest rate, your monthly mortgage payments may still increase within that limit. This is something that would not happen were you to take out a fixed-rate mortgage.

Additionally, those who take out a capped rate mortgage might be subject to higher-than-standard fees. This is due to the lender potentially losing out on the amount it can profit from interest with the cap in place. These higher fees also mean that should you want to end the mortgage deal early, it could cost more than with other loan deals.

 

Capped Rate Mortgage Providers

Compared to other types of mortgages, there are relatively few capped rate mortgage providers on the market. However, at Lending Expert, we compare the capped rate mortgage market in order to find the best provider to suit your needs.

Rather than approaching the lenders directly and dealing with their in-house advisors, working with a mortgage broker will offer impartial advice to get you the best deal on the market.

 

How Do I Compare Capped Rate Mortgage Rates?

Working with a mortgage broker such as Lending Expert will help you find the best mortgage to suit your circumstances without impacting your credit rating.

Contact us today to speak to an expert and start comparing capped rate mortgages to find the best option for you.

 

What To Consider Before Getting a Capped Rate Mortgage

Prospective buyers should always consider the following factors before deciding to take out a capped rate mortgage: 

  • Attitude to risk 
  • Loan term
  • Monthly income
  • Will you want to repay your mortgage early
  • Affordability of initial higher monthly payments
  • How does the initial interest rate compare to fixed rates

 

What Happens if I Do Not Keep Up With Repayments?

Your capped rate mortgage is secured against the property meaning that any late repayments will lead to a damaged credit score, late penalties and maybe even risk of property repossession from the lender. 

The period of the capped rate variable rate mortgage deal is typically between two to five years. After that, you will be subject to the lender’s standard variable rate, which is higher. At this stage, you can look to take out a new capped rate deal or search for a different mortgage either with the existing provider or a new company.

 

Why Use Lending Expert as Your Capped Rate Mortgage Broker?

Working with a number of high street banks and specialist mortgage lenders, Lending Expert has access to over 1,000 mortgage deals available and is in the perfect position to help you get approved and get the best rates.

Our eligibility checker is completely free to use and can provide an indicative quote, with no obligation. 

Founded in 2013, we have years of experience working in the secured loan and mortgage market and have helped thousands of customers to date. Our values have always been to find the right product for the right individual at the competitive rate – and we are pleased to offer our services for you today!

FAQ

Capped rate mortgages are the rarest types of mortgage you will find available when you are looking for a mortgage. At any one time there are only a handful of these available. They are very similar in nature to a standard variable rate mortgage, but there is one significant difference, and that is that there is a cap on the interest rate that you will pay. In practical terms this means that once your payments reach a cap, even if the interest rate soars above this, your payments will not go any higher. However you also retain the benefits when interest rates drop as you payments will also drop.

The capped rate is offered for a limited amount of time, in very much the same way as a fixed rate mortgage is. These periods range from around 2 years up to a maximum of 5 years. Once this capped rate period ends, as with a fixed rate mortgage, your mortgage will return to a standard variable rate mortgage. Capped rate mortgages and fixed rate mortgages are the only types of mortgages available that will give you the security of knowing that your payments will not go above a certain level for the duration of the tie-in period. Unlike a fixed rate though, you also get the benefits of interest rate drops.

While this can seem like an attractive option, you should not automatically assume that this will provide you with the most cost effective mortgage as capped rate mortgages will generally offer a higher variable rate than a good tracker mortgage. If you do opt for a capped rate mortgage, check out all of the details carefully about the length of time your capped rate will be in place and any restrictions or fees that will be incurred if you decide to move your mortgage or if you wish to pay it off. There may also be restrictions on the amount of mortgage overpayments you can make that can be more limited than for a standard tracker or fixed rate mortgage.

Even if interest rates are currently low, do make sure that you are able to afford the payments if the interest rate rises above the cap. This is now part of the standard mortgage application process and so is something that you will have to be able to make a decision on well before any interest rate rise. You should also make sure that you are able to manage a flexible mortgage payment and so be able to deal with varying amounts going out from month to month depending on the current interest rate.