mortagesandforeclosures

by Monty Burn

We'll discover what the fixed rate mortgage is, and its benefits. We will also look into how a mortgage overpayment calculator might save you lots of cash. The fixed rate gives you security for a while & the overpayment calculator might give you a pleasant surprise.

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. Locked in interest rates mean locked in monthly payments.

Do fixed rate mortgages have any plus points? 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.

If the bank base interest rate starts to rise, yours will stay as it is. In the not too distant past there have been some real scary rate rises. Being on a variable rate leaves you susceptible to the rapid rise of your monthly payment.

There is a situation when maybe you should think twice about a fixed rate mortgage. If you suddenly have an extra family member and need more space. Or you are simply considering moving home soon. Either of these events will cause you to trigger an unwanted redemption penalty.

Fixed rate mortgages usually come with charges called redemption penalties. You can get hit with a nasty charge when you are least expecting it. If a charge like this will hurt you then you must think very carefully before taking a fixed rate mortgage.

One thing to consider while having the mortgage is to pay a bit extra every month if you can afford it. You may not realise but you can pay any amount over the minimum monthly payment. The lenders would love you to do this but they will rarely tell you that you can indeed pay extra.

What are the best reasons to paying a bit extra every month? You can easily shave years of your mortgage. Be debt free much earlier. By paying a bit extra now, the savings mount up substantially later on.

How do you use a mortgage overpayment calculator? You input various figures relating to your mortgage. You also enter a figure that you want to overpay. You can play around with this figure.

You get to see what sort of length in years you can knock off. It will tell you what sort of cash lump sum you can expect to save 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 might be pleasantly surprised at the savings to be made. If you borrowed a hundred thousand at five percent over twenty five years. If you pay an extra fifty each month, you can shave more than 3 years off the length and save 12,000 in interest payments.

If you can afford to pay 100 extra instead of 50 what would happen? Paying 100 extra every month using the same example mortgage. In this new example the time saved is over six years and the financial saving is more than twenty thousand.

One more advantage is that the years you save are payment free, nothing at all to pay. Being mortgage free a few years early could easily be achieved by paying a bit extra now. You will never hear this from your lender though; it's simply not in their interests to tell you to pay off early.

In our example where we saved six years off the length with a hundred a month overpayment. We could save a further 40 thousand by not having to pay your lender every month. This saving is yours as you will never need to give it to your lender as you originally planned.

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 the savings to be made by paying a bit extra every month. It all adds up.

About the Author:

Monty Burn was once in charge of the Voluntary Mortgage Regulator. He was forced out becuase he was saving borrowers 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/is-a-fixed-rate-mortgage-the-right-one-for-you/