Capped Mortgages Explained

What is a capped rate mortgage?

This type of mortgage deal does what it says on the tin. While it’s another type of variable rate mortgage which moves with either the Bank of England’s base rate or the lender’s standard variable rate (SVR), the capped rate means there’s a limit on how high your interest rate can rise to. Most lenders aren’t offering this type of mortgage at the moment due to rates being lower anyway, eliminating the need for a set upper limit.

Pros and cons of capped rate mortgages

This mortgage is ideal if you feel you will benefit from falling interest rates, but want the safety net that when mortgage rates increase, you can still afford the higher rates. While not often available in the current climate, if interest rates are set to drastically rise, capped mortgages could make a comeback. However, the cap is usually set quite high, so the concept may sound more appealing than it is in reality.


When introductory incentive deals with a mortgage lender come to an end, it’s usually the case that you’ll be switched to their standard variable rate (SVR). If you think you can get a better deal, remortgaging may be the option for you.

When looking to apply for any type of mortgage, getting professional, impartial advice can help you get the best mortgage product for you. Find a trusted mortgage adviser in your local area here.