Earlier this week, Yorkshire Building Society launched a new capped mortgage.

The new two year deal is a capped tracker rate mortgage currently priced at 3.19 per cent. At 2.69 per cent over the Bank of England base rate and capped at 5.49 per cent, this means that for the next two years the mortgage would increase in line with the base interest rate but cannot go over 5.49 per cent.

This sort of mortgage is ideal for those who want the low interest rate now and still protect themselves from future interest rate rises.

In effect, this mortgage means your monthly repayment would increase with the base interest rate until that base rate hits 2.75 per cent. After that, as the base rate rises your monthly repayment would stay the same because it had hit the capped interest rate of 5.49 per cent.

As discussed in earlier articles, what is important to note with capped rate mortgages is whether or not a collar is in place. Some mortgage lenders have been caught out in the last year because they did not have a collar in place so as the base rate dropped they have had to pass on every decrease.

This capped mortgage from Yorkshire Building Society does have a collar set at 3 per cent. This means if the base rate were to drop by another 0.25 per cent or more, then the decrease would not passed on.

The new Yorkshire BS mortgage is available to housebuyers with a 25 per cent deposit or equity and has a reduced arrangement fee of just £245. There are also offers for £250 cashback for new purchases and those remortgaging a property can have either the cashback or free valuation and legal fees.

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