Capped Rate Remortgages
These types of remortgages are also referred to as Capped and Collared. Capping the rise in the interest rate and collaring the fall. This is a product comprising one of the most attractive aspects of Fixed Rate Remortgage whilst mixing a the key feature of the Variable Rate Remortgage. One can also benefit from a decrease if the lender's standard variable rate falls below the level at which the cap was set.
If the base rates go down, the remortgage payments will follow and if they were to rise the interest rate payable will not exceed the interest cap that was sent originally. Capped rate remortgages often deliver peace of mind in volatile financial markets.
Capped rate remortgages typically last for a few years, I.e., around five years, but they can be capped for the entire life of the remortgage. Some capped rate remortgages come with introductory discount periods, so read the small print.
Advantages of a Capped Rate Remortgage
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When interest rates are likely to rise, they offer protection for borrowers against repayments going over a certain level.
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Capped remortgages make it easier to budget your expenses when you know how much your remortgage repayment amount could be capped to.
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Remember that in addition to this, you can enjoy the benefits of any cuts made to the lender's SVR.
Disadvantages of a Capped Rate Remortgage
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The rate payable can usually be higher than that available on a comparable fixed rate or discounted rate product.
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A conservative choice, as your not getting the cheapest rate on the market.