A capped rate mortgage is very similar to a fixed except that if the variable rate drops below the capped rate, the borrower will make payments based on the lower variable rate.

However should rates increase the 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.

For more information about Capped Rate Mortgages, contact one of our independent advisers.