mortagesandforeclosures

by Monty Burn

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. The fixed rate gives you security for a while & the overpayment calculator might give you a pleasant surprise.

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. Locked in interest rates mean locked in monthly payments.

Do fixed rate mortgages have any plus points? Because your payments stay the same you don't get ups and downs in your monthly payments. You can plan your monthly spending easier knowing your mortgage won't go up unexpectedly.

It doesn't matter how much interest rates rise, your payments are 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. Moving home in the next year or so. Having a planned or even unplanned child can be reasons to avoid fixed rate mortgages. Either of these events will cause you to trigger an unwanted redemption penalty.

Fixed rate mortgages nearly always come bundled with a redemption penalty. These redemption penalties can hit you hard just when you don't need it. If a charge like this will hurt you then you must think very carefully before taking a fixed rate mortgage.

During the term of your mortgage it's worth considering paying a bit extra each month if your budget will stretch. 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.

What are the up sides to paying extra each and every 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 can enter all the relevant figures from your particular deal. 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. 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.

Some of the savings can be staggering. As an example, borrow 100,000 at 5% over 25 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? The same mortgage example but paying 100 extra every month. In this new example the time saved is over six years and the financial saving is more than twenty thousand.

Another plus point is the years you knock off are totally payment free. Being mortgage free a few years early could easily be achieved by paying a bit extra now. Lenders will not tell you this, they like to keep this a secret.

If we look at the example where we paid 100 extra and knocked over 6 years off the length. You pay nothing more for the last 6 years of the term, which equates to about another 40 grand saved. You don't pay this money to your lender so you get to keep it, either save it or spend it.

In this article we've looked at the potential of fixed rate mortgages. Every month you pay the same so you get to sleep easy at night knowing this. We also had a look at a mortgage overpayment calculator and the potential savings that can be had.

About the Author:

Monty Burn was head honcho at the Voluntary Mortgage Regulator until they sacked him for helping the regular guy on the street save money. Discover your best fixed rate mortgage deal. You could also try our overpayment calculator on your mortgage and see what you could save.

Get all the information and photos:: http://mortgagewide.info/now-is-the-time-to-get-a-fixed-rate-mortgage/