What is the difference between a 5-year variable closed and 5-year variable capped mortgage?

With a variable closed mortgage, your interest rate can change based on market conditions, but your payment stays the same during the term. As rates change, the amount of your payment going toward principal and interest changes as well. 

With a variable capped mortgage, your rate can still change, but it has a limit. You pay a small premium over the variable closed rate, and your rate will not rise above the 1% over the variable rate you received when you signed. This can offer added peace of mind if rates increase.