An interest rate that is set for anything from a few months to several years. This means that if the interest rate went up above the set limit you wouldn't pay any more with a Capped Rate Mortgage. However, unlike a fixed rate your interest rate can go down. The lenders make their money by locking you into a capped rate mortgage for a minimum limited period and may include a penalty clause if you try to swap. Capital and Interest Mortgage More commonly known as a repayment mortgage your monthly mortgage repayments to your lender covers the capital, the actual money you borrowed, and the interest the lender charges you for borrowing the money.