We’ll have a look at what benefits there are to a fixed rate mortgage for you. We’ll then take a look at an overpayment calculator for your mortgage. With the fixed rate mortgage comes security. With the mortgage overpayment calculator comes potential savings.
A fixed rate mortgage is one of the various types available. You get a fixed interest period for several years. Your interest rate, and therefore your payments are fixed.
Do fixed rate mortgages have any plus points? Your payment is fixed because your particular interest rate is fixed. You can estimate your outgoings easier knowing your monthly payment is fixed.
Bank base rates may rise drastically, however yours will be the same because it’s fixed. 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 can be certain circumstances when a fixed rate mortgage may not be right for you. If you suddenly have an extra family member and need more space. Or you are simply considering moving home soon. These types of situations could invoke a nasty redemption penalty on your fixed rate mortgage.
Nearly all fixed rate mortgages have a redemption penalty attached. You can get hit with a nasty charge when you are least expecting 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. You lender will prefer you make the minimum payment and will never tell you it’s possible to pay extra.
Are there any advantages to paying a bit extra each month? You can easily shave years of your mortgage. Be debt free much earlier. You also save a lot of money in the process, sometimes a staggering amount.
In what way does a mortgage overpayment calculator work? You enter your mortgage details. The amount borrowed, the length, the interest rate etc. You then enter any extra amount you can afford to pay. Or enter various value for fun.
You get a resulting figure out of the calculator in years you can shave off. It also tells you what sort of financial saving you can expect to make. Playing around with the actual overpayment figure can reveal that the more you can pay, the faster you finish your mortgage.
There are astonishing amounts of savings to be had. If you borrowed a hundred thousand at five percent over twenty five years. Making an overpayment of 50 every month will save you 12,000 and knock over 3 years off.
Now an example of 100 extra instead of 50 extra. The same mortgage example but paying 100 extra every month. This saves you more than 20,000 and knocks a respectable 6 years off the term.
An extra advantage is you won’t have any payments to make during the last few years of the mortgage. You could be free of the shackles of your mortgage early by paying a little more now. You won’t hear this info from any lenders though. You need to discover info like this for yourself.
If we revisit the example where we knocked more than six years off the mortgage. This shortening of the mortgage by six years saves you another 40,000 or more. This saving is yours as you will never need to give it to your lender as you originally planned.
In conclusion we listed a few benefits of a fixed rate mortgage. Every month you pay the same so you get to sleep easy at night knowing this. We also looked into the future and saw some big savings if you can make a little overpayment now.
Don't Make the Mistake of Buying Cartoonish Landscaping Software Program
Topics: standard mortgages, home, family, fixed rate mortgage