How Does It Work?
May be used in combination with a capped rate or a tracker (or both). Your payments are variable but will not fall below a set level (the ‘collar’).
Early Repayment Charges?
Not usually, unless it is used in combination with a capped rate or a special-deal tracker rate (or both). But check and see.
What does it mean for you?
- It may be part of another interest-rate deal which otherwise appears attractive. But note that if the rate payable is only just above the ‘collar’ and you think rates will fall, you may not get the full benefit of a reduced payment.
- If the Bank of England rate goes up, you may see your monthly payments increase.