Out of the many mortgages on offer, capped rate mortgages are ones that are a bit harder to find and are less common. However, they can be very useful. So, why are they difficult to find? If you want to know what the benefits of capped rate mortgages are, then you should read this article and learn all about them.
From their benefits to why they aren’t as easy to find as some of the other kinds of mortgages, this article has the information you need.
The difference between capped rate mortgages and variable rate mortgages
Do you know what variable rate mortgages are? The interest rate on them can change as the market’s rates change. So, if the market’s rates were to increase, so would your interest rate (and you would have to pay more interest for that month). With variable rate mortgages, the interest rate can change at anytime, so you don’t know whether you’ll be paying double the usual interest, or half the usual interest, at any given time.
Now, capped rate mortgages are similar to variable rate mortgages, but they’re better in one way: they have a limit (or a cap) on how high the interest rate on your mortgage can rise.
This makes it far better than variable rate mortgages, as you’ll have the benefit of knowing that the amount you need to pay each month will never go beyond a certain point, and also that you can pay less when the rates drop!
Why are they difficult to find?
You may be wondering why they’re harder to find than variable rate mortgages if they’re better. Well, the market’s rates have been quite low recently – and since there are better deals that work with the low interest rate, many lenders don’t bother to offer capped rate mortgages.
They’re good for when the rates are high, but they’re currently quite low, so other loans may be more beneficial. However, if you think that the rates may increase by a lot whilst you are paying for your mortgage, then you should consider getting a capped mortgage rate.
There isn’t a way to predict how the market rates will change in the future, but if you’re thinking about getting a home loan it’s certainly a better choice than a variable rate mortgage (even if these are easier to find at the moment). You’re likely to find a broker who offers these kinds of mortgages if you search hard enough.