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Interest rate cap

An interest rate cap determines the maximum interest rate on your housing loan. So even if interest rates were to rise significantly, your interest rate will not exceed the agreed cap. It allows you to enjoy the current low interest rates without having to worry about their rise. It can be added to new and existing housing loans alike.

Reaping the benefits of low reference rates

The reference rate on your loan tracks the Euribor rate. This means that you will reap the benefits of low Euribor rates – and if they fall, the reference rate on your loan will decrease too.

The reference rate will not exceed a certain level 

You will be safe in the knowledge that the reference rate on your loan will not exceed the agreed level – so even if general interest rates were to rise, your interest rate will stop at the cap.

Stability against reference rate fluctuations

The monthly payment on a housing loan is typically the largest individual expense in a household. An interest rate cap helps keep the monthly payment under control.

Flexibility for your loan instalments

If your loan has an interest rate cap, you can flexibly change your loan’s repayment schedule. This means that you can add instalment-free months to your loan, for example. 

Features of the interest rate cap

  • An interest rate cap can be added to both a new loan and an existing housing loan.
  • You can have an interest rate cap for a housing loan, which is tied to 12-month Euribor rate. This means you can make changes to the repayment schedule and other details of your loan under the same principles as with other Euribor-linked loans.
  • You can take an interest rate cap with a validity of 7 or 10 years. There are also multiple alternatives available for interest hedging, i.e. for the upper limit of the interest rate.

Example of an interest rate cap and the annual percentage rate of charge (APR)

Add an interest rate cap to your loan to set a maximum level for the reference rate during the validity of the interest rate cap.

Example of an interest rate capOpens new window

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Should I save and invest or pay off my housing loan?

Finns have traditionally repaid their home loans quickly but it may not the best option for most. Wondering why?

Read more about saving while repaying a loan

What would higher interest rates mean for your monthly loan payment?

Use our home loan calculator to see how a change in interest rate would affect your monthly payments.

Try our home loan calculator