A capped rate mortgage is one where you agree to a maximum rate of interest for a set period of time. This is essentially a type of variable interest rate mortgage with a 'ceiling'. You will still be able to benefit from any interest rate decreases but if interest rates rise, the maximum interest you can be charged by your lender is the agreed capped rate. This can be useful in the early years of your mortgage when money might be tight - you'll know what your maximum outgoings are likely to be, at least in terms of your mortgage payments.
As with most 'introductory' offers, the set period for capped rates is normally one to five years after which you revert to your lenders Standard Variable Rate.
