Capped Rate
A capped rate puts a ceiling on the interest rate. I.e. your payments may not exceed a certain interest rate.
The advantage: You know exactly what your maximum mortgage payment will be, and even if interest rates generally rise, your costs won’t exceed the capped rate. You may benefit from falling interest rates.
The disadvantage: Capped rates are generally in excess of fix rates available. The may also have a “collar” being a minimum interest rate you could pay. This protects the lender against low interest rates. Generally there are very few capped rates on the market.
