Definitions for "Capped-rate mortgage"
The interest rate charged on the mortgage cannot exceed a maximum rate, known as a cap. The cap applies for a fixed period.
A mortgage with an interest rate that cannot go above a certain level, even if mortgage rates rise, but can fall as rates drop.
The mortgage interest rate cannot go above a certain level, even if mortgage rates rise, but can fall down as rates drop. Ain't no free lunches, though, and if you want to extricate yourself from the mortgage during the capped rate period (say three or five years), you'll have to pay a redemption penalty.