The cap fits if you get a discount too

You're looking for a mortgage. You're nervous about possible future interest rate rises but you're also not sure about tying yourself to a fixed rate for a few years. So what about a capped rate?

A good option is a capped rate with a discount, says Simon Jones at London-based mortgage broker Savills Private Finance. With these, what you pay won't go higher than the stated capped rate during the deal period - and if rates fall you'll benefit too.

Mr Jones likes Bristol & West's capped deal where you pay bank base rate plus 0.99%, giving a current pay rate of 4.74%, but capped at 5.65% until January 31, 2008. The minimum deposit is 5% and there are no early redemption penalties after the capped period ends. There is a £299 arrangement fee.

Fellow broker Charcol is offering an exclusive cap-plus-discount deal where the current pay rate is lower - 4.24% - but the cap is higher: 5.99% until January 31, 2007. The minimum deposit is 5% and again there are no redemption penalties, but the fees are quite hefty: a £399 lender fee, £49 booking fee plus a broker fee of between nothing and 1%.

"There are some cheaper discounts on the market but this rate is significantly cheaper than the best fixed rates for a comparable period," says Charcol.

Many fixed deals now look pricey but London-based broker Chase de Vere Mortgage Management is doing an exclusive "market-leading" five-year fixed rate deal.

The rate is fixed at 4.85% until February 1, 2009, and the minimum deposit is 20%. Redemption penalties apply during the term but not after. There is an arrangement fee of £495. Simon Tyler at Chase de Vere says: "Everybody thought the last of the sub-5% five-year fixes had gone. The next cheapest five-year rate is fixed at 5.19%."