Advantages and Disadvantages of a Capped Rate Remortgage

This type of remortgage is also called a "capped and collard" remortgage. This is referring to capping a rise in the interest rate and collaring the fall. There are variations of this type of remortgage, but the most unique aspect is that a combination of fixed and variable rates are included. Advantages and disadvantages of this type of remortgage are as follows:

Advantages:

Offers protection to borrowers against repayments going over a certain level when interest rates possibly rise

Makes budgeting easier because it is known what the repayment maximum is

Any cuts made to lender’s SVR become yours in addition to the remortgage rate you started with

Disadvantages:

The rate payable for fixed or discounted rate products usually is lower

It is a conservative choice as your rate is not the lowest available

Capped Rate Remortgage

A capped rate remortgage as well as other remortgage type products should be dissected by the borrower to decide which one offers the best fit.