Return to the Mortgage Glossary Home to view explanations for all mortgage terms. What follows is the definition for the term Capped Rate Mortgages as it relates to mortgages in the UK. Capped Rate MortgagesA capped rate mortgage is one where the rate of interest you are charged is guarenteed to never go above a particular amount. This provides some security for those taking out the mortgage, that the amount they pay in interest will never go above a particular point. Unlike fixed rate mortgages though, the value can go down without limit if interest rates drop. As such, you are getting security against interest rates rising, whilst still getting the benefit if rates drop. The capped rate will typically only be available for a period at the beginning of the mortgage, during which time there may be redemption penalties if you want to move your mortgage
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