Why Should You Get A Capped Mortgage

Why Should you​ Get a​ Capped Mortgage?
Many people who get variable rate mortgages find that they can mix the​ security of​ a​ fixed rate mortgage whilst still having variable rates by getting a​ capped mortgage plan .​
If you​ are looking for a​ variable rate mortgage then you​ should seriously consider putting a​ cap on​ the​ mortgage .​
Here is​ some useful advice about whether or​ not you​ should proceed with a​ capped mortgage:
What is​ a​ capped mortgage?
Capped mortgages are a​ type of​ variable rate mortgage .​
a​ variable rate mortgage means that the​ interest rate on​ your repayments can vary .​
By putting a​ cap on​ the​ interest rate,​ it​ means that even if​ your interest rate changes,​ it​ can only change by so much .​
There is​ an​ upper limit on​ what you​ can pay,​ but if​ the​ interest rate falls then you​ will pay less .​
Capped mortgages are the​ option in​ between variable and fixed rate mortgages.
What are the​ advantages?
The obvious advantage of​ a​ capped mortgage is​ that you​ can benefit from variable rates but never have to​ pay above a​ certain limit .​
This allows you​ to​ take advantage of​ potentially lower rates,​ but also adequately budget each month and have peace of​ mind that your payments will not rise above a​ certain amount .​
In many ways,​ a​ capped mortgage is​ the​ best of​ both worlds .​
If you​ think that interest rates are going to​ go down,​ then getting a​ fixed rate mortgage now would be unwise as​ the​ fixed rate will be uncompetitive in​ a​ year’s time .​
Also,​ if​ you​ think that interest rates are going to​ rise then you​ want to​ have an​ upper limit on​ how much you​ can be charged .​
If you​ want a​ mixture of​ security and cheap prices,​ then a​ capped rate mortgage is​ for you.
The pitfalls
However,​ all of​ these benefits come at​ a​ price .​
Capped mortgage rates are usually higher than fixed rate or​ variable rate starting prices,​ because you​ get so many benefits .​
Also,​ there are not as​ many lenders willing to​ offer capped rate mortgages because of​ the​ obvious benefits to​ the​ borrower .​
You usually have to​ have a​ good credit history and even then it​ can be hard to​ get a​ capped mortgage .​
However,​ if​ you​ don’t mind paying a​ slightly higher rate and want the​ chance to​ get lower prices as​ well as​ being able to​ budget,​ then a​ capped rate mortgage is​ for you.
Getting a​ capped rate mortgage
As previously mentioned,​ there are fewer lenders offering capped rate mortgages than other types of​ mortgage .​
This makes shopping around an​ easier task,​ but it​ is​ still necessary to​ do so in​ order to​ find the​ best deals .​
If you​ are still unsure about whether or​ not a​ capped rate mortgage is​ suitable for you,​ then speak to​ an​ independent financial advisor .​
Even if​ you​ already have a​ mortgage,​ you​ might be able to​ negotiate a​ deal with your current lender and put a​ cap on​ your variable rate mortgage.

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