Well take a look at fixed rate mortgages and how they can be good for you. Then prepare to be amazed at the savings made with a mortgage overpayment calculator. You get security from the fixed rate mortgage & you may get a nice surprise from the overpayment calculator.
There are a few different types of mortgage, the fixed rate being only one of them. You get your interest rate locked for the period of the deal, usually a few years. Locked in interest rates mean locked in monthly payments.
Are there any benefits to a fixed rate mortgage? Because your payments stay the same you don't get ups and downs in your monthly payments. You can benefit by knowing your monthly payment is fixed which allows you to budget more effectively.
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.
Fixed rate mortgages usually come with charges called redemption penalties. These redemption penalties can hit you hard just when you don't need it. These unexpected charges can hurt. Consider carefully whether a fixed rate is the one for you.
During the term of your mortgage it's worth considering paying a bit extra each month if your budget will stretch. You don't have to make the same payment month after month for 25 years. It's not often, if at all, that a lender will tell you it's possible to pay more than your normal minimum monthly payment.
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.
You get to see what sort of length in years you can knock off. You get the expectant cash saving as well. Both the years and cash saved obviously increase if you put in a higher overpayment figure.
Some of the savings can be staggering. If we take a mortgage of 100,000 borrowed over 25 years and assume you get an average 5% interest rate. 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.
Now an example of 100 extra instead of 50 extra. Using the same figures in the mortgage but substituting 100 extra for the previous 50 extra. This saves you more than 20,000 and knocks a respectable 6 years off the term.
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.
If we look at the example where we paid 100 extra and knocked over 6 years off the length. We could save a further 40 thousand by not having to pay your lender every month. 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. You get to sleep easy in the knowledge your payment will stay the same month after month. We also had a look at a mortgage overpayment calculator and the potential savings that can be had.
There are a few different types of mortgage, the fixed rate being only one of them. You get your interest rate locked for the period of the deal, usually a few years. Locked in interest rates mean locked in monthly payments.
Are there any benefits to a fixed rate mortgage? Because your payments stay the same you don't get ups and downs in your monthly payments. You can benefit by knowing your monthly payment is fixed which allows you to budget more effectively.
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.
Fixed rate mortgages usually come with charges called redemption penalties. These redemption penalties can hit you hard just when you don't need it. These unexpected charges can hurt. Consider carefully whether a fixed rate is the one for you.
During the term of your mortgage it's worth considering paying a bit extra each month if your budget will stretch. You don't have to make the same payment month after month for 25 years. It's not often, if at all, that a lender will tell you it's possible to pay more than your normal minimum monthly payment.
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.
You get to see what sort of length in years you can knock off. You get the expectant cash saving as well. Both the years and cash saved obviously increase if you put in a higher overpayment figure.
Some of the savings can be staggering. If we take a mortgage of 100,000 borrowed over 25 years and assume you get an average 5% interest rate. 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.
Now an example of 100 extra instead of 50 extra. Using the same figures in the mortgage but substituting 100 extra for the previous 50 extra. This saves you more than 20,000 and knocks a respectable 6 years off the term.
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.
If we look at the example where we paid 100 extra and knocked over 6 years off the length. We could save a further 40 thousand by not having to pay your lender every month. 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. You get to sleep easy in the knowledge your payment will stay the same month after month. We also had a look at a mortgage overpayment calculator and the potential savings that can be had.
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! Read up on how to get a great fixed rate deal on your mortgage. You could also try our overpayment calculator on your mortgage and see what you could save.
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