mortagesandforeclosures

by Monty Burn

We'll have a look at what benefits there are to a fixed rate mortgage for you. Then prepare to be amazed at the savings made with a mortgage overpayment calculator. From definite security with the fixed rate mortgage to potential cash saved with the overpayment calculator.

A fixed rate mortgage is a special type of mortgage where you have a fixed interest period. The interest rate is fixed, usually for a number of years. If the interest rate remains static, so do your monthly payments.

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. It's a lot easier to plan financially knowing your payment will be the same.

If the bank base interest rate starts to rise, yours will stay as it is. In our lifetime we have already seen some distressing interest rate rises. Being on a variable rate leaves you susceptible to the rapid rise of your monthly payment.

A fixed rate mortgage could be a mistake for you under certain circumstances. 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. In situations like these you may need to redeem the mortgage and pay a hefty redemption penalty on the fixed rate mortgage.

Most fixed rate mortgages come tied to a nasty redemption penalty. These charges can be pretty steep, and come at a time when you don't need the extra stress. Think hard before you take a fixed rate mortgage as these charges can really disrupt your plans.

It's worth thinking about paying a bit extra each month in addition to whatever you normally pay. You don't have to make the same payment month after month for 25 years. Lenders prefer you to make payments like this but they never inform you that you could pay extra if you wish.

What benefit does paying a bit extra each month have on you and your mortgage? You can easily shave years of your mortgage. Be debt free much earlier. You can save a shedload of cash as well as knock a few years off.

How do overpayment calculators work? You can enter all the relevant figures from your particular deal. You can enter a figure that you may think about paying as an extra payment each month.

The calculator will show you how many years you can expect to shorten your mortgage by. 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.

You may be amazed by how much you could save. If you borrowed a hundred thousand at five percent over twenty five years. By paying an extra fifty each month could save you over 3 years and 12 thousand.

The last example was an overpayment of 50 every month, but what happens if you pay 100 extra. 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 benefit is that for the last few years of the original (25 year) term, you don't pay anything. It's definitely a reality for you to be free of your mortgage years before planned. 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. 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. You get a good night's sleep and regular level payments. We also looked at potential savings by paying extra each month. Every little helps.

About the Author:

Grab a FREE copy of Monty's Mortgage Bible, the book that caused the Voluntary Mortgage Regulator to sack him. Get a great fixed rate mortgage deal here. 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/fixed-rate-mortgage-not-if-you-want-to-move-home/