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.
