mortagesandforeclosures

by Monty Burn

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.

Of the various types of mortgage available, the fixed rate is only one of them. A fixed period of interest that may be a couple or several years. Because the interest rate is fixed, so are your monthly payments.

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.

Under certain circumstances, a fixed rate mortgage could be a mistake. If you suddenly have an extra family member and need more space. Or you are simply considering moving home soon. These types of situations could invoke a nasty redemption penalty on your fixed rate mortgage.

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. These unexpected charges can hurt. Consider carefully whether a fixed rate is the one for you.

A consideration during your mortgage term is to pay a bit extra each month on top of your normal payment. You are not tied to make the same payments for the duration of the mortgage, usually 25 years. Lenders prefer you to make payments like this but they never inform you that you could pay extra if you wish.

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.

In what way does a mortgage overpayment calculator work? 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.

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.

You might be pleasantly surprised at the savings to be made. As an example, borrow 100,000 at 5% over 25 years. You could save over twelve thousand and shorten the mortgage by more than 3 years just by paying an extra 50 each month.

The last example was an overpayment of 50 every month, but what happens if you pay 100 extra. Using the same figures in the mortgage but substituting 100 extra for the previous 50 extra. This saves you more than 20,000 and knocks a respectable 6 years off the term.

An extra advantage is you won't have any payments to make during the last few years of the mortgage. It's definitely a reality for you to be free of your mortgage years before planned. You won't hear this info from any lenders though. You need to discover info like this for yourself.

In the example where we paid an extra 100 every month and shortened the mortgage by six years. This shortening of the mortgage by six years saves you another 40,000 or more. You don't pay this money to your lender so you get to keep it, either save it or spend it.

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.

About the Author:

Grab a FREE copy of Monty's Mortgage Bible, the book that caused the Voluntary Mortgage Regulator to sack him. Read up on how to get a great fixed rate deal on your mortgage. Maybe have a play with our mortgage overpayment calculator and shock yourself at how much cash you could save.

Get all the information and photos:: http://mortgagewide.info/fixed-rate-mortgage-could-allow-you-to-sleep-in-peace/