If you're stuck between choosing a fixed or variable rate mortgage, a capped mortgage deal could seem like the ideal solution.
What is a capped rate mortgage?
In many respects a capped rate mortgage is a cross between a fixed rate and variable interest mortgage.
Capped mortgages have a variable interest rate that changes in line with a base rate - usually the Bank of England's - however, unlike other variable interest mortgages they also limit the level of interest you'll be charged should interest rates start to rise.
Can I apply for a capped rate mortgage?
Like the dodo, sabre tooth tiger and woolly mammoth, the capped rate mortgage is currently extinct.
In recent years, with the Bank of England base rate stuck at a historic low of 0.5%, one by one all the Banks and Building Societies have withdrawn their mortgage interest rate cap offers, meaning the capped mortgage is no longer available on the UK high street.
However, the capped rate mortgage could make a re-appearance in the future and we'll list them on this page if they do.
Types of capped rate mortgages
You used to be able to get several types of capped mortgages in the UK; these included:
Standard capped mortgages
These worked in a similar way to most variable rate mortgages, fluctuating a certain percentage above a bank specified rate, except they prevented your mortgage interest rate from increasing above a certain threshold.
Capped tracker mortgage deals
These specifically followed the Bank of England base rate, again with the interest rate limited to a certain maximum level.
Capped offset mortgages
These were merged together with your savings and offered a discount on your mortgage interest equivalent to your saving balance.
If the capped rate mortgage is to make a re-appearance in the future these are just some of the potential deals that could be on offer.
Alternatives to capped rate mortgages
With no capped mortgages currently on offer in the UK, if you're looking for a new mortgage deal you'll have to weigh up your other options.
If you are looking for the security of knowing your mortgage payments won't increase for a set period then a fixed rate mortgage could be the best choice, you can compare the best fixed rate deals using our fixed rate mortgage comparison table.
Alternatively if you are happy for your interest rate to change and are looking for the cheapest deal right now, you can compare variable interest deals using our Variable Rate Mortgages table.
Where can you get help?
Of course, if you're unsure what type of mortgage is best for your circumstances you can enter your details into our mortgage broker form and an FCA authorised mortgage broker in your area will get in touch to discuss your options.