mortagesandforeclosures

by Monty Burn

We'll discover what the fixed rate mortgage is, and its benefits. We'll then take a look at an overpayment calculator for your mortgage. The fixed rate gives you security for a while & the overpayment calculator might give you a pleasant surprise.

Fixed rate mortgages are one of a few different types of mortgage available. Usually for a period of several years, you get a fixed rate of interest. Your interest rate, and therefore your payments are fixed.

What, if any, are the up sides to fixed rate mortgages? Your payment is fixed because your particular interest rate is fixed. It's a lot easier to plan financially knowing your payment will be the same.

Bank base rates may rise drastically, however yours will be the same because it's fixed. There have been some alarming short term interest rate rises in our recent history. A rapid rise over a year or so could really see payments rise for those on standard variable mortgages.

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. Any situation which sees you changing mortgage can invoke a horrid redemption penalty on you.

Most fixed rate mortgages come tied to a nasty redemption penalty. At a time when you least need it, you could get hit with a redemption penalty. Think hard before you take a fixed rate mortgage as these charges can really disrupt your plans.

You might like to think about paying a small extra overpayment each month as you go through the length of your mortgage. 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 best reasons to paying a bit extra every month? If you consistently pay extra in the early years of your agreement you can knock several years off the length. Not only do you save years, you can also save thousands and thousands of your hard earned money.

What do you do with a mortgage overpayment calculator? You input various figures relating to your mortgage. You can then play around by changing the figure you can afford to overpay.

The calculator will show you how many years you can expect to shorten your mortgage by. You get to see how much money you could possibly save. Playing around with the actual overpayment figure can reveal that the more you can pay, the faster you finish your mortgage.

You might be pleasantly surprised at the savings to be made. Quick example, 25 year mortgage borrowing 100,000 at 5%. By paying an extra fifty each month could save you over 3 years and 12 thousand.

Nice savings on a 50 extra payment. But what happens if you pay an extra 100 though? Paying 100 extra every month using the same example mortgage. You can knock a staggering 6 years or more off the length and save yourself in the region of 20 thousand.

Another plus point is the years you knock off are totally payment free. It's definitely a reality for you to be free of your mortgage years before planned. Of course your lender will never tell you this, you have to discover this on your own.

In the example where we paid an extra 100 every month and shortened the mortgage by six years. No payments for 6 years means another 40 thousand saved in monthly payments. You can do what you like with this extra as it never needs to be paid to your lender.

To recap we had a look at what benefit a fixed rate mortgage has for you. Every month you pay the same so you get to sleep easy at night knowing this. We also looked at potential savings by paying extra each month. Every little helps.

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! Discover your best fixed rate mortgage deal. You could shave years off and save thousands on your mortgage using our overpayment calculator on your mortgage.

Get all the information and photos:: http://mortgagewide.info/why-should-i-consider-a-fixed-rate-mortgage/