Capped Rate Remortgages

Capped rate remortgages are similar to fixed rate mortgages in a way that capped rate mortgages have a certain cap to the lender’s standard variable rate. It is usually offered by lenders for a specified period of time to the remortgage applicants, before reverting to standard variable rate (SVR).

For Example: If the agreed capped rate is 4.5% and the lenders standard variable rate rises to 4.6%, the rate payable would remain at 4.5%, if the rates indeed go lower, then the borrower would enjoy the benefits of low interests rates upon repayment. Therefore providing a set range for the level of remortgage repayments for a set time frame, thus delivering peace of mind.

The downside of a capped rate remortgage is that most re-mortgage lenders offer a slightly higher interest rate cap than the equivalent fixed rate remortgages, remember these lenders aren't daft and it is their interest to cater for any risks. Additionally the fees associated with capped rate remortgages can often be higher, so make sure you read the small print.

To sum up, capped rate re-mortgages can be a good option. Although the applicants continue to benefit from a variable rate, there still is a possibility of the interest oscillating throughout the period. So, the applicant basically has an idea as to how much their outgoings will be.

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