We’ll have a look at what benefits there are to a fixed rate mortgage for you. We will also look into how a mortgage overpayment calculator might save you lots of cash. Security comes with the fixed rate mortgage, whereas huge savings can come with the overpayment calculator.

A fixed rate mortgage is one of the various types available. Usually for a period of several years, you get a fixed rate of interest. The interest rate you pay is locked; therefore your monthly payments are also locked.

What, if any, are the up sides to fixed rate mortgages? You benefit by not having the yo-yo effect on your monthly payments. They stay the same every month. You can plan your monthly spending easier knowing your mortgage won’t go up unexpectedly.

Bank base rates may rise drastically, however yours will be the same because it’s fixed. In the last few decades we have seen interest rates almost double in a few short months. Being on a variable rate leaves you susceptible to the rapid rise of your monthly payment.

There are a few situations when a fixed rate mortgage may be a bad decision. If you think you may move home, or even have another child and need an extra bedroom, then think carefully before taking a fixed rate mortgage. Either of these events will cause you to trigger an unwanted redemption penalty.

Most fixed rate mortgages come tied to a nasty redemption penalty. These redemption penalties can hit you hard just when you don’t need it. Think hard before you take a fixed rate mortgage as these charges can really disrupt your plans.

One thing to consider while having the mortgage is to pay a bit extra every month if you can afford it. You may not realise but you can pay any amount over the minimum monthly payment. You lender will prefer you make the minimum payment and will never tell you it’s possible to pay extra.

Are there any advantages to paying a bit extra each month? If you consistently pay extra in the early years of your agreement you can knock several years off the length. You can save a shedload of cash as well as knock a few years off.

What do you do with a mortgage overpayment calculator? You can enter all the relevant figures from your particular deal. You can then play around by changing the figure you can afford to overpay.

You get a resulting figure out of the calculator in years you can shave off. You get to see how much money you could possibly save. Both the years and cash saved obviously increase if you put in a higher overpayment figure.

There are astonishing amounts of savings to be had. If you borrowed a hundred thousand at five percent over twenty five years. Making an overpayment of 50 every month will save you 12,000 and knock over 3 years off.

That example is paying just 50 extra every month. What if you could afford 100 a month to overpay? We’ll use the same mortgage example figures but pay 100 extra. You can knock a staggering 6 years or more off the length and save yourself in the region of 20 thousand.

Another benefit is that for the last few years of the original (25 year) term, you don’t pay anything. Being free of your mortgage chains a few years early is a definite reality if you can pay extra now. Lenders will not tell you this, they like to keep this a secret.

In our example where we saved six years off the length with a hundred a month overpayment. No payments for 6 years means another 40 thousand saved in monthly payments. This is money you can spend or save as it’s not going to your lender every month.

In conclusion we listed a few benefits of a fixed rate mortgage. Every month you pay the same so you get to sleep easy at night knowing this. We also had a look at the savings to be made by paying a bit extra every month. It all adds up.

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