mortagesandforeclosures

by Monty Burn

We'll have a look at what benefits there are to a fixed rate mortgage for you. We'll then look at using 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. You get a fixed interest period for several years. The interest rate you pay is locked; therefore your monthly payments are also locked.

What are the advantages of a fixed rate mortgage? No need to worry about fluctuating interest rates. Your rate and your payments are fixed. You can estimate your outgoings easier knowing your monthly payment is fixed.

No matter what the average interest rate is, your rate will stay the same. In the last few decades we have seen interest rates almost double in a few short months. You may struggle to meet your payments if you have a variable mortgage and rates rise suddenly.

There can be certain circumstances when a fixed rate mortgage may not be right for you. You may decide you need to move house, or even have an unexpected child and simply need more room. 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. You can get hit with a nasty charge when you are least expecting it. There is never a good time to be hit with extra charges so think carefully before taking the fixed rate mortgage.

It's worth thinking about paying a bit extra each month in addition to whatever you normally pay. You are not tied to make the same payments for the duration of the mortgage, usually 25 years. You lender will not tell you it's possible to pay extra as they prefer you just pay the minimum.

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 input various figures relating to your mortgage. You can then play around by changing the figure you can afford to overpay.

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. Putting bigger figures in the overpayment box will show bigger savings and even more time saved.

Some of the savings can be staggering. If you had a 25 year mortgage and borrowed 100 grand at 5% interest. You could save over twelve thousand and shorten the mortgage by more than 3 years just by paying an extra 50 each month.

That example is paying just 50 extra every month. What if you could afford 100 a month to overpay? Using the same example mortgage from earlier we now pay 100 extra. 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. By paying a little extra now, you could easily be mortgage free well before you ever expected. You never get info like this from your lender. This sort of stuff is kept quiet by the industry.

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.

We've looked at some of the advantages of a fixed rate mortgage. Regular payments and a good night sleep. We also looked at potential savings by paying extra each month. Every little helps.

About the Author:

The Voluntary Mortgage Regulator got rid of Monty as chief because he was actually saving punters too much cash! Find out how to get a top fixed rate mortgage deal at his site. 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/ignore-interest-fluctuations-with-a-fixed-rate-mortgage/