What is a Capped Rate Mortgage?
This is a variable rate with a specified maximum interest rate that your payments cannot exceed, for a set period of time usually one to five years, although can be longer. You know at the outset what your maximum monthly payments will be (the capped rate). However, if the variable interest rate falls below the capped rate, your mortgage payments will go down.
This is a variable rate with a specified maximum interest rate that your payments cannot exceed, for a set period of time usually one to five years, although can be longer. You know at the outset what your maximum monthly payments will be (the capped rate). However, if the variable interest rate falls below the capped rate, your mortgage payments will go down. At the end of the capped rate period, your payments will revert to whatever the variable rate is at the time.
