COLLARED RATE

Collared rates work like a capped rate mortgage though these are as the name suggests the opposite way round.

Collared Rate Mortgages are put in place by lenders who want to set a minimum level that the rate can go down to. Sometimes lenders who offer a very good Discount Rate Mortgage or Bank of England (BoE) Base Rate Tracker Mortgage, put one of these lower limits in place.

So generally these collars are a bolt on clause to another mortgage deal. It allows the lender to have an opportunity to make some money on even the very best deals. Though this would only happen if rates dropped considerably.