Mortgage loans or real estate loans are loans used to purchase land or buildings such as houses or factories. These are typically long-term loans and the interest rate charged can be either a variable or a fixed rate for the term of the loan, which often ranges from 15 to 30 years. The land and buildings purchased serve as the collateral for the loan.
Capped mortgages are those that have a limit on the interest rate which it (the interest rate) cannot go over. This means that the borrower who takes out a capped mortgage can enjoy the benefits of the fluctuations in interest that can happen below this rate. So, you cap your mortgage at 8% but you can be paying 5, 6 or 7% depending on the market, whilst never paying over 8%.
Capped Rate Mortgages are perfect for those who have a limit in mind of what would be the maximum, comfortable, repayment on their mortgage.
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