When you\u2019re buying a home of your own, deciding on the right mortgage is just one of the many important things you must do. When you\u2019re considering which mortgage is right for you, a capped rate mortgage is one that you may come across.\r\n\r\nIt can be a good option for some, but one thing we know from the many enquiries we get about capped interest rate mortgages is that not everyone understands exactly what they are or <em>why<\/em> they can be a good option.\r\n\r\nTo help you find out more about what a capped rate mortgage is, how they work and what the benefits of them are, we have written this guide.\r\n\r\nIn it, you\u2019ll find the following topics...\r\n<ul>\r\n \t<li><a href="#capped-rate-mortgage-meaning">Capped rate mortgage meaning: What is a capped rate mortgage?<\/a><\/li>\r\n \t<li><a href="#how-does-a-capped-rate-mortgage-work">How does a capped rate mortgage work?<\/a><\/li>\r\n \t<li><a href="#do-capped-rate-mortgages-have-good">Do capped rate mortgages have good rate of interest?<\/a><\/li>\r\n \t<li><a href="#what-are-the-benefits-of-a-capped">What are the benefits of a capped rate mortgage?<\/a><\/li>\r\n \t<li><a href="#are-there-any-downsides-to-having">Are there any downsides to having a capped rate mortgage?<\/a><\/li>\r\n<\/ul>\r\n[feefo-banner]\r\n<h2 id="capped-rate-mortgage-meaning">What is a capped rate mortgage?<\/h2>\r\nA capped rate mortgage is a type of variable rate mortgage, but the rate can only go up to a certain rate. If you were to agree a capped rate mortgage, the rate would be similar to your lender\u2019s <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/category\/standard-variable-rates\/" target="_blank" rel="noopener noreferrer" aria-label="Standard Variable Rate (SVR) (opens in a new tab)">standard variable rate (SVR)<\/a> and it would rise in-line when the Bank of England\u2019s rate rises and your lender\u2019s SVR rate increases.\r\n<h3>Capped rate mortgages explained<\/h3>\r\nThe big difference between a capped rate mortgage and an SVR, is that while a capped mortgage interest rate does rise, it can only rise so far. What this means is that even though your mortgage payments can increase, there is a limit to how far they can rise.\r\n\r\nIf you\u2019re looking for the right mortgage and think a capped rate might be right for you but want to find out more about them, speaking with an experienced mortgage advisor can help. Contact Online Mortgage Advisor and we\u2019ll connect you with one of the experienced and reliable advisors we work with, to help you make the right decision for your needs.\r\n<h2 id="how-does-a-capped-rate-mortgage-work">How does a capped rate mortgage work?<\/h2>\r\nCapped rate mortgages work in a similar way to other SVR mortgage products. The initial mortgage interest rate is based on the official Bank of England\u2019s base rate. Also like an SVR, if the UK\u2019s central bank reduces interest rates, the SVR and capped mortgage rates will also be cut.\r\n\r\nSimilarly, if the Bank of England raises its rate, a lender will also increase its SVR and capped mortgage rates. But, while in theory, an SVR mortgage can rise for as long as the Bank of England raises its rates, with a capped rate mortgage, the interest rate you\u2019re charged can only rise to a certain level, or cap, say 5% or 6%.\r\n<h2 id="do-capped-rate-mortgages-have-good">Do capped rate mortgages have good rate of interest?<\/h2>\r\nA capped rate mortgage can\u2019t rise beyond a certain level which means you have some certainty that your mortgage repayments won\u2019t go through the roof. However, that doesn\u2019t necessarily mean they have a great rate of interest.\r\n\r\nTypically, SVR mortgages are higher than <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/fixed-rate-mortgages\/" target="_blank" rel="noreferrer noopener" aria-label="fixed rate (opens in a new tab)">fixed-rate mortgages<\/a> and <a href="https:\/\/www.onlinemortgageadvisor.co.uk\/best-mortgage-rates-uk\/best-tracker-mortgage-rate\/" target="_blank" rel="noreferrer noopener" aria-label="tracker mortgages (opens in a new tab)">tracker mortgages<\/a> and that\u2019s the same for a capped rate mortgage. Your lender has to make the product work for them too.\r\n\r\nSo, what does that mean for you? Well, that will the initial rate of your capped rate mortgage will likely be around the same as an SVR, which is higher than other fixed rate deals that are available.\r\n\r\nCapped rate mortgages can be the perfect option for some home-buyers. Speaking with a qualified and experienced mortgage broker can be the best way to get reliable advice, compare mortgages and find out if you should be looking for a capped rate mortgage for your home purchase.\r\n<h2 id="what-are-the-benefits-of-a-capped">What are the benefits of a capped rate mortgage?<\/h2>\r\nThere are a number of benefits to agreeing a capped rate mortgage.\r\n\r\nThey include:\r\n<ul>\r\n \t<li>You know the maximum monthly repayment you will face if interest rates do rise<\/li>\r\n \t<li>Your mortgage interest rate can go down as well as up<\/li>\r\n<\/ul>\r\nThese are the main benefits of this type of mortgage, although there may be more depending on your specific circumstances.\r\n\r\nIf you\u2019re interested in discovering if a capped rate mortgage is the right option for you, then why not speak with an experienced and approachable mortgage advisor, like those we work with? <a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/match-me-with-a-specialist-broker" target="_blank" rel="noreferrer noopener" aria-label=" (opens in a new tab)">Get in touch<\/a> and we\u2019ll connect you with the right mortgage broker for your home-buying needs.\r\n<h2>Are there any downsides to having a capped rate mortgage?<\/h2>\r\nNo mortgage is perfect and of course all lenders create mortgages that will work for them financially. With this in mind, the main downside of a capped rate mortgage is that the initial interest rate is not as competitive as some other mortgage deals on offer.\r\n\r\nMost lenders SVRs are higher than their fixed rate and tracker mortgages and as the few capped rate mortgages that are available are based on the SVR, this means you could get a cheaper repayment with a different type of mortgage.\r\n\r\nHaving said that, if a fixed rate or tracker deal isn\u2019t right for you, but you want to find a mortgage that has a cap or a maximum repayment level, then a capped rate mortgage could still be the best option for your particular circumstances.\r\n<h2>How do I compare capped rate mortgage deals?<\/h2>\r\nTo ensure you end up with the best deal that you qualify for, it\u2019s important to carry out a capped rate mortgage comparison across the entire market. Approaching only one lender could mean missing out on better rates elsewhere.\r\n\r\nMaking enquiries with multiple lenders could mean unwanted marks on your credit report, and online rates tables aren\u2019t as useful as you might think, since they often give prominent placement to sponsored products and aren\u2019t tailored to your profile.\r\n\r\nThe solution is simple: <a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/match-me-with-a-specialist-broker" target="_blank" rel="noreferrer noopener" aria-label="make an enquiry (opens in a new tab)">make an enquiry<\/a> and have one of the whole-of-market brokers we work with carry out a capped rate mortgage comparison on your behalf. Through them, you will have access to all of the best deals you qualify for and will be paired with the right lender first time!\r\n<h2 id="are-there-any-downsides-to-having">Get capped rate mortgage advice from an expert broker<\/h2>\r\nIf you\u2019re interested in finding out more about a capped rate mortgage, getting capped rate mortgage comparisons, finding out if there are any good deals available or even advice on the meaning of capped rate mortgages or if they\u2019re the right product for you, then <a href="https:\/\/enquiries.onlinemortgageadvisor.co.uk\/match-me-with-a-specialist-broker" target="_blank" rel="noreferrer noopener" aria-label=" (opens in a new tab)">make an enquiry<\/a>.\r\n\r\nThen you can just sit back and relax while we do the hard work and get in touch with the experienced mortgage advisors we work with. We\u2019ll then connect you with the right mortgage advisor for your needs, who will ensure you get the right advice. You can have everything explained to you to help you decide whether there\u2019s a capped rate mortgage or a different mortgage borrowing option.