Capped Rate Mortgages explained and available help from Shire Direct
Capped Rate Mortgages are a combination of a fixed rate and variable rate mortgage. It's kind of like having your cake and eating it!
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Here we explain how Capped Rate Mortgages work, their advantages and disadvantages, and how Shire Direct can help if you are looking for a Capped Rate Mortgage.
Table of Contents:
What is a Capped Rate Mortgage?
So, as we established in the introduction, a Capped Rate Mortgage is a combination of both a fixed rate mortgage, and a variable rate mortgage, essentially it's a case of having your cake and eating it!
The capped rate provides a fixed ceiling on the interest you pay, thus guaranteeing the interest charged on your borrowings over a predetermined preferential part of your mortgage term (usually 2 to 5 years), but in the event mortgage rates fall during the preferential period, so will the interest you pay, in line with the variable rate.
What are the advantages of a Capped Rate Mortgage?
Well, you can see Capped Rate Mortgages provide the best of both worlds, the benefits of a capped rate mortgage are
- a cap on the rate of interest you'll pay if the lender's standard variable rate rockets
- and a reduction in the interest charged if the standard rate falls!
But there is a price!
What are the disadvantages of a Capped Rate Mortgage?
Although you will benefit from falling interest rates, and will be protected in the event of an interest rate increase, there are drawbacks to Capped Rate Mortgages and these are
- the cap will usually be set at approximately 0.5% higher than an equivalent fixed rate
- there will usually be a lender's plan fee of around £250 - £400
Require more information on Capped Rate Mortgages?
Hopefully, we've managed to answer your initial questions on Capped Rate Mortgages and their advantages and disadvantages. If you are thinking of applying for a mortgage or remortgage, and require our assistance, we would of course be delighted to hear from you! You can speak with a qualified Mortgage Advisor up until 10.00pm daily including weekends - so why not call our Freephone number on 08000 282 281, or contact us online anytime. We'd love to hear from you!
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.
Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.