Capped Mortgage 

This is a further refinement of the fixed rate, which sets an upper limit on interest rates for an agreed number of years. This means that if the variable rate climbs up the graph paper, borrowers with capped mortgages can be protected, knowing they wont have to pay more.

The extra benefit is that if interest rates go down, people with capped mortgages can still take advantage of this and will have lower repayments.

This might sound like a win-win for the borrower. But remember that these are all promotional offers, giving you a short-term incentive to sign up. These benefits are only for the opening years of a mortgage and there is plenty of time for lenders to make back anything they lose.

Also, the rates offered for a capped mortgage will not necessarily be the keenest rates available, because as you might have gathered, banks and building societies are not in the habit of giving away money.

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