Capped and Collared Rate
Your payable interest rate would usually be the standard variable rate, but with a guarantee that your payable interest rate will not go above the capped rate. However, nor will it fall below the collared rate.
For example, if you have a capped rate of 8% with a collared rate of 4% for the duration of the cap and collar, your payable interest rate will only fluctuate between these limits.
After the capped period, the rate charged usually reverts to the lenders standard variable rate, with no ongoing limits to the payable interest rate.
