Capped rate

How Does It Work?

Your payments are variable and often linked to a base rate, but fixed not to go above a set level (the ‘ceiling’ or ‘cap’) during the period of the deal. At the end of the period, you are usually charged the lender’s standard variable rate.

Changes in the Bank of England’s interest rate may influence the lender’s rate. The impact depends on if it’s tracking a base rate or not.

Early Repayment Charges?

During the special deal: yes, almost always. They can apply even after the end of the special deal period as well.

What does it mean for you?

  • You know the maximum you will pay for a set period of time.
  • Useful if you want the security of knowing that your payments can’t rise above the set level, but still benefit if rates fall.
  • If the Bank of England rate goes up, you may see your monthly payments increase.