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The biggest rate reductions are usually over the shortest period, as the Lenders are usually more confident over predicting interest rate trends over the short term.
The Lender quotes a rate and period over which it will apply. If the variable
rate goes over this, you win. If it drops below this, they win.
This type of loan is ideal if you need to work on a budget and can't afford
to take the risk of increases in rate.
On the face of it, this is a better deal than fixed, as if the variable rate falls
below the cap, then so does your mortgage rate. If however,their rate goes over the
cap, your mortgage rate doesn't.
Capped rate offers tend to vary considerably, so it is important that you compare
the rate and period with fixed rates.
This is a variable rate mortgage, but the lender guarantees that your rate
will always have a discount over the period of the offer.
The amount of the discount is agreed at the outset.
This is a good deal if you feel that interest rates are likely to fall during the
period of the offer.