Echo Finance

CAPPED MORTGAGES

Your rate moves in line normally with the lender’s SVR. But the cap means the rate can’t rise above a certain level.

Advantages

  • Certainty - your rate won’t rise above a certain level. But make sure you could afford repayments if it rises to the level of the cap.
  • Cheaper - your rate will fall if the SVR comes down.

Disadvantages

  • The cap tends to be set quite high;
  • The rate is generally higher than other variable and fixed rates;
  • Your lender can change the rate at any time up to the level of the cap.

 

These can be a type of mortgage with a:

  • Variable interest rate

  • Tracker interest rate

  • Discount interest rate

Although their interest rates can go up or down with the base rate or your lender's SVR, they come with a guarantee that they will not rise above a certain amount.

For example: You take out a mortgage with a 1% discount and a cap at 4.5%. The SVR is 5% at first, so you pay 4%. After a year, the lender raises its SVR to 6%, so your new interest rate would change to 5%. However, the cap means you only pay 4.5%.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.
Echo Finance

Registered in England and Wales No. 6939070. Registered office - The 1812 Building, Wheatley Park, Mirfield, West Yorkshire, WF14 8HE. Echo Finance Limited is authorised and regulated by the Financial Conduct Authority. Echo Finance Limited is entered on the FCA register (www.fca.org.uk) under reference 570073. The Guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. The Financial Conduct Authority does not regulate Will Writing, Estate Planning and some forms of Mortgages. © Copyright Echo Finance Limited. Where you have a complaint or dispute with us and we are unable to resolve this to your satisfaction then we are obliged to offer you the Financial Ombudsman Service to help resolve this. Please see the following link for further details: www.financial-ombudsman.org.uk.

Echo Finance Limited

The 1812 Building, Wheatley Park, Mirfield, West Yorkshire, WF14 8HE

Local Rate: 01484213337
Freephone: 08000934914
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