Capped Rate Mortgage

A capped rate mortgage is a type of variable rate mortgage. The difference with this type of mortgage is that there is an interest rate cap, which your payments will not rise above. This mortgage is usually offered for just the first 2-5 years, after which you will be put the lenders standard variable rate.

Is it right for you? Here's what you need to weigh up..
Pros:

If interest rates rise above what you can afford, you have peace of mind that you will not suffer

Cons:

You will likely be paying for the security that this mortgage offers. They usually have a much higher variable rate than most other variable rate mortgages


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