Collared Rate Remortgages

Collared rate remortgage is the type of remortgage where the interest charged on the loan amount fluctuated as per the SVR mortgage. However, the loan is ceiled at a particular rate is not going to rise or fall beyond a particular the set limit for the specific period of time. However rise and fall in the interest rate is determined by the terms capped and collared mortgages respectively. Sometime , borrowers may also opt for the collared rate mortgage alone which restrict the interest rate on the loan to fall with the down play of interest rate at standard variable rate.

The main advantages of taking up collared rate mortgage includes -

  • You don’t have worry about everyday rise and fall of the interest rates as per the Standard variable rate SVR as you already know the maximum amount that you are required to pay fro the limited period of time.
  • The type of mortgage is useful in case you want to have the security of knowing that the amount of loan will not rise above the predetermined interest rates, but you could still enjoy the benefit if the rates fall.
  • Apart from the above-mentioned benefits there are disadvantages of choosing collared rate mortgage. These are-
  • Even if the interest rate falls as per the lender standard variable rate, your interest rate will not go down below the level of collar.
  • In case you decide to pay back the loan early, you will charge with early repayment charges.
  • Be it any mortgage product, the collared rate deals will be set for the fixed term after which you will be charged as per the lender SVR by default. So, move on and chosen collared rate mortgage if you think that it will benefits you in your situations.