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Fixed Rate Mortgages: Stop your mortgage payments from rising

At this time (summer 2008), we feel that interest rates are likely to increase to the highest level seen in a decade. People that have not fixed or capped their mortgage are likely to see costs increase significantly.

What is a fixed rate?
The interest rate does not change for a given period of time, so you will know exactly what your repayments are going to be. Fixed rates offer stability and are the only sure way to guarantee your monthly payments won’t change. There are no reductions in payments if interest rates go down during the fixed rate period. They are a good choice if you don’t feel you have much financial leeway and need to work to a budget

What is a capped rates
The interest rate charged will not increase beyond a certain level but it could fall if interest rates are reduced. Initially, the interest rate will be higher than a comparable fixed rate, so if you think interest rates are set to fall but you can't afford for them to rise the this type of mortgage might be good for you.

(summer 2008) the credit crunch has reduced the number of mortgages to choose from. As a result there are very few capped rates to choose from. It looks like interest rates will rise, so at this time you will probably find better value in a simple fixed rate mortgage.