Capped Rate Mortgages

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Definition: Capped Rate Mortgages

Capped Rate Mortgages

Full Definition of Capped Rate Mortgages

Capped rate mortgages are a cross between a fixed rate and a variable rate mortgage. The interest rate will never rise above a certain rate within what is known as the capped rate period. If the usual variable mortgage rate is less than the capped rate then the borrower is charged that variable rate. Such a mortgage is attractive as the borrower can benefit from falling interest rates but will not have to pay more than the capped rate.

Along with the term capped rate, the phrase cap and collar mortgages is often encountered. The ‘collar’ is the minimum interest rate, whilst the maximum interest rate payable is known as the ‘cap’. As these mortgages involve the lender having to source funds it is usual for early redemption penalties to be imposed if the mortgage is redeemed within a capped rate period.

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Modern Language Association (MLA):
Capped Rate Mortgages. Payroll & Accounting Heaven Ltd.
January 26, 2022
Chicago Manual of Style (CMS):
Capped Rate Mortgages. Payroll & Accounting Heaven Ltd. (accessed: January 26, 2022).
American Psychological Association (APA):
Capped Rate Mortgages. Retrieved January 26, 2022
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Definition Sources

Definitions for Capped Rate Mortgages are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 15th February, 2020 | 2 Views.