Capped and collar explained

The borrower will be charged the lenders variable rate with an upper interest limit which the variable rate cannot exceed.
The lender might also offer a capped mortgage with collar mortgage capped and collar where the rate will not fall below a certain rate: collar level.

What is a Capped Mortgage

Capped mortgage rate - where similar to a fixed rate, the interest the rate cannot rise above the cap but can vary beneath the cap. Sometimes there is a collar associated with this type of rate which imposes a minimum rate. Capped rate are often offered over periods similar to fixed rates, e.g. 2, 3, 4 or 5 years

What is a Collar Mortgage

A collar is where the interest rate of your mortgage will not go below a certain threshold of interest rate set at the outset of the mortgage agreement for a length of time.

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