Whilst still a variable rate product, a capped rate mortgage
is very similar to a fixed in as much as you can limit (or
fix) the amount you pay, if the variable rate drops below
the capped rate.
If interest rates rise above the
Capped Rate
You will make payments based on the lower variable rate.
If interest rates rise above the
Capped Rate
Should rates increase , your payments will be 'capped'
and will not rise over the capped rate.
So as a rough 'rule of thumb' a capped rate is better
to have than a fixed if all other factors are equal. Again,
as with fixed rates, up-front charges and 'lock-ins' are common.
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