With a capped rate mortgage there is a maximum interest rate you will be charged for a given period.

The interest rate you pay will not be any higher than the agreed capped rate; therefore you know from the outset the maximum amount your monthly repayments could rise to.

You benefit from having an upper limit for your monthly payments but  you also have the added advantage of seeing your payments reduce if interest rates fall below the capped rate.

The main disadvantages are that some capped mortgages have a lower limit below which the interest rate cannot fall (known as a collar). They are usually more expensive than fixed rate mortgages and there are often redemption penalties to pay if you cancel your mortgage early.

A professional mortgage advisor can help you to decide which is the best capped rate mortgage most suitable for you.