1. A borrower’s interest costs, net of the cap reimbursements, can never be higher than the agreed maximum.
2. Caps do not lock a borrower into a fixed minimum rate of interest. They can benefit from low interest rates when rates fall.
3. Cap owners may be more attractive to lenders because there is less risk that they will be unable to meet their loan payments when interest rates rise.
4. Provided that the cap premium has been paid, there can never be a penalty to exit a cap early.
5. Caps are separate contracts from the borrowings they protect. Cap owners can re-organise their loans without having to adjust the cap.
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