We'll discover what the fixed rate mortgage is, and its benefits. Then prepare to be amazed at the savings made with a mortgage overpayment calculator. You get security from the fixed rate mortgage & you may get a nice surprise from the overpayment calculator.
Of the various types of mortgage available, the fixed rate is only one of them. The interest rate is fixed, usually for a number of years. If the interest rate remains static, so do your monthly payments.
Do fixed rate mortgages have any plus points? Your payment is fixed because your particular interest rate is fixed. You can estimate your outgoings easier knowing your monthly payment is fixed.
It doesn't matter how much interest rates rise, your payments are fixed. In our recent history there have been some frightening short term interest rate rises. If the rates rose drastically over a short term those on variable mortgages could struggle to meet payments.
There is a situation when maybe you should think twice about a fixed rate mortgage. You may decide you need to move house, or even have an unexpected child and simply need more room. Either of these events will cause you to trigger an unwanted redemption penalty.
Most fixed rate mortgages come tied to a nasty redemption penalty. When you can least afford it you could have a charge slapped on you. Think hard before you take a fixed rate mortgage as these charges can really disrupt your plans.
During the term of your mortgage it's worth considering paying a bit extra each month if your budget will stretch. You don't have to make the same payment month after month for 25 years. You lender will prefer you make the minimum payment and will never tell you it's possible to pay extra.
What are the best reasons to paying a bit extra every month? If you consistently pay extra in the early years of your agreement you can knock several years off the length. By paying a bit extra now, the savings mount up substantially later on.
In what way does a mortgage overpayment calculator work? You enter your mortgage details. The amount borrowed, the length, the interest rate etc. You then enter any extra amount you can afford to pay. Or enter various value for fun.
You get a resulting figure out of the calculator in years you can shave off. It also tells you what sort of financial saving you can expect to make. Playing around with the actual overpayment figure can reveal that the more you can pay, the faster you finish your mortgage.
Some of the savings can be staggering. If you had a 25 year mortgage and borrowed 100 grand at 5% interest. By paying an extra fifty each month could save you over 3 years and 12 thousand.
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. In this new example the time saved is over six years and the financial saving is more than twenty thousand.
One more advantage is that the years you save are payment free, nothing at all to pay. Being mortgage free a few years early could easily be achieved by paying a bit extra now. Of course your lender will never tell you this, you have to discover this on your own.
If we go back to the extra 100 each month where we managed to shave six years off. A six year saving translates into about a forty grand saving in cash. You can do what you like with this extra as it never needs to be paid to your lender.
To recap we had a look at what benefit a fixed rate mortgage has for you. You get a good night's sleep and regular level payments. Also consider the huge potential in making a little overpayment every month. Even small amounts will add up.
Of the various types of mortgage available, the fixed rate is only one of them. The interest rate is fixed, usually for a number of years. If the interest rate remains static, so do your monthly payments.
Do fixed rate mortgages have any plus points? Your payment is fixed because your particular interest rate is fixed. You can estimate your outgoings easier knowing your monthly payment is fixed.
It doesn't matter how much interest rates rise, your payments are fixed. In our recent history there have been some frightening short term interest rate rises. If the rates rose drastically over a short term those on variable mortgages could struggle to meet payments.
There is a situation when maybe you should think twice about a fixed rate mortgage. You may decide you need to move house, or even have an unexpected child and simply need more room. Either of these events will cause you to trigger an unwanted redemption penalty.
Most fixed rate mortgages come tied to a nasty redemption penalty. When you can least afford it you could have a charge slapped on you. Think hard before you take a fixed rate mortgage as these charges can really disrupt your plans.
During the term of your mortgage it's worth considering paying a bit extra each month if your budget will stretch. You don't have to make the same payment month after month for 25 years. You lender will prefer you make the minimum payment and will never tell you it's possible to pay extra.
What are the best reasons to paying a bit extra every month? If you consistently pay extra in the early years of your agreement you can knock several years off the length. By paying a bit extra now, the savings mount up substantially later on.
In what way does a mortgage overpayment calculator work? You enter your mortgage details. The amount borrowed, the length, the interest rate etc. You then enter any extra amount you can afford to pay. Or enter various value for fun.
You get a resulting figure out of the calculator in years you can shave off. It also tells you what sort of financial saving you can expect to make. Playing around with the actual overpayment figure can reveal that the more you can pay, the faster you finish your mortgage.
Some of the savings can be staggering. If you had a 25 year mortgage and borrowed 100 grand at 5% interest. By paying an extra fifty each month could save you over 3 years and 12 thousand.
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. In this new example the time saved is over six years and the financial saving is more than twenty thousand.
One more advantage is that the years you save are payment free, nothing at all to pay. Being mortgage free a few years early could easily be achieved by paying a bit extra now. Of course your lender will never tell you this, you have to discover this on your own.
If we go back to the extra 100 each month where we managed to shave six years off. A six year saving translates into about a forty grand saving in cash. You can do what you like with this extra as it never needs to be paid to your lender.
To recap we had a look at what benefit a fixed rate mortgage has for you. You get a good night's sleep and regular level payments. Also consider the huge potential in making a little overpayment every month. Even small amounts will add up.
About the Author:
Monty Burn was head of the Voluntary Mortgage Regulator until his sacking for helping too many people. Find out how to get the best fixed rate mortgage deal. You could shave years off and save thousands on your mortgage using our overpayment calculator on your mortgage.
