Well take a look at fixed rate mortgages and how they can be
good for you. We'll also take a peek at how much you could
save with an overpayment calculator. Security comes with the
fixed rate mortgage, whereas huge savings can come with the
Of the various types of mortgage available, the fixed rate is only one of them. 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 are the fixed rate mortgage good points? You benefit by not having the yo-yo effect on your monthly payments. They stay the same every month. You can benefit by knowing your monthly payment is fixed which allows you to budget more effectively.
Bank base rates may rise drastically, however yours will be the same because it's fixed. In the not too distant past there have been some real scary rate rises. A rapid rise over a year or so could really see payments rise for those on standard variable mortgages.
There can be certain circumstances when a fixed rate mortgage may not be right for you. The arrival of a new child could mean you need a bigger home and need to move. These are reasons to avoid fixed rate mortgages. Any sort of situation like this can cause unexpected charges by way of redemption penalties.
Fixed rate mortgages nearly always come bundled with a redemption penalty. At a time when you least need it, you could get hit with a redemption penalty. Think hard before you take a fixed rate mortgage as these charges can really disrupt your plans.
A consideration during your mortgage term is to pay a bit extra each month on top of your normal payment. You may have a fixed rate but it doesn't mean your payments have to be fixed if you can afford extra. Lenders prefer you to make payments like this but they never inform you that you could pay extra if you wish.
What are the up sides to paying extra each and every month? You can easily shave years of your mortgage. Be debt free much earlier. Not only do you save years but you save piles of cash, usually many thousands.
What do you do with a mortgage overpayment calculator? You input various figures relating to your mortgage. You can enter a figure that you may think about paying as an extra payment each month.
The calculator tells you how many years you will knock off. You get the expectant cash saving as well. If you play around with the overpayment figure you can see that the more you overpay the more you save, in cash and years.
Some of the savings can be staggering. If you borrowed a hundred thousand at five percent over twenty five years. You could save over twelve thousand and shorten the mortgage by more than 3 years just by paying an extra 50 dollars each month.
Nice savings on a 50 dollars extra payment. But what happens if you pay an extra 100 dollars though? Paying 100 dollars extra every month using the same example mortgage. You can knock a staggering 6 years or more off the length and save yourself in the region of 20 thousand dollars.
An extra advantage is you won't have any payments to make during the last few years of the mortgage. By paying a little extra now, you could easily be mortgage free well before you ever expected. You won't hear this info from any lenders though. You need to discover info like this for yourself.
If we go back to the extra 100 dollars each month where we managed to shave six years off. No payments for 6 years means another 40 thousand dollars saved in monthly payments. This is 40 grand in your pocket and not your lenders. Overpaying is difficult, make no mistake, but the rewards can be amazing.
There you have a few benefits of going for a fixed rate mortgage. Regular payments and a good night sleep. We also had a look at the savings to be made by paying a bit extra every month. It all adds up.
Discover your best fixed rate mortgage deal. You can also play with our mortgage overpayment calculator and shock yourself at how much cash you could save.