10:56 19 August 2013
Capped rate mortgages used to be popular alternatives to fixed mortgage deals. Borrowers prefer them because with this, lenders limit the maximum rate of interest they charge if rates go up. This means that borrowers will have an idea on the maximum amount that they will to pay. This helps them budget their money effectively.
Although capped rate mortgages were extremely popular, they are considered extinct these days. Why? It’s because the Bank of England has been stuck with 0.5per cent interest rate in recent years. This resulted to banks withdrawing their mortgage interest rate cap offers.
However, experts believe that these mortgages will still be available in the future if the interest rate increases.
Right now, the best alternative for capped rate mortgages are fixed rate mortgages. This is a type of mortgage where in the interest rate will remain the same for at least 3-5 years. When looking for the best deals, always shop and compare to ensure that you’re getting the lowest rate in the market.