Advantages
If mortgage rates go down you will follow but to a certain level.
Disadvantages
The collar is normally part of a deal that otherwise looks attractive, i.e. a capped rate. You think you are ok and that the rate will fall if the bank of England rate falls but the collar will stop your rates falling. Try to avoid this scheme.
Normally you will have a penalty for early repayment.
For truly independent advice from the FT Adviser, UK Mortgage Broker of the Year for 2005, 2006 and 2007, complete our enquiry form or feel free to call us in confidence on 0800 0112825.
