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. With the fixed rate mortgage comes security. With the mortgage overpayment calculator comes potential savings.

Fixed rate mortgages are one of a few different types of mortgage available. The interest rate is fixed, usually for a number of years. The interest rate you pay is locked; therefore your monthly payments are also locked.

What are the advantages of a fixed rate mortgage? 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. There have been some alarming short term interest rate rises in our recent history. Being on a variable rate leaves you susceptible to the rapid rise of your monthly payment.

Under certain circumstances, a fixed rate mortgage could be a mistake. Moving home in the next year or so. Having a planned or even unplanned child can be reasons to avoid fixed rate mortgages. Either of these events will cause you to trigger an unwanted redemption penalty.

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.

It’s worth thinking about paying a bit extra each month in addition to whatever you normally pay. 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.

What are the up sides to paying extra each and every month? Topping up your monthly minimum payment means you can knock a few years of the length of your mortgage. By paying a bit extra now, the savings mount up substantially later on.

What do you do with a mortgage overpayment calculator? It uses figures from your mortgage. Amount, interest rate, length of term 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. You get to see how much money you could possibly save. The figures in years and cash saved will increase the more you overpay each month.

You may be amazed by how much you could save. 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.

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

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 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. This is 40 grand in your pocket and not your lenders. Overpaying is difficult, make no mistake, but the rewards can be amazing.

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.

Let’s find out just what a fixed rate mortgage is, and how it may benefit you. We’ll then take a look at an overpayment calculator for your mortgage. Security comes with the fixed rate mortgage, whereas huge savings can come with 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.

A redemption penalty is a charge that almost always comes with a fixed rate deal. When you can least afford it you could have a charge slapped on you. You must think twice before agreeing to a fixed rate deal if a charge like this will badly affect you.

A consideration during your mortgage term is to pay a bit extra each month on top of your normal payment. It’s not set in stone that you have to pay the same minimum amount every month. 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? You can shave several years off your mortgage term by paying slightly more each month. Not only do you save years, you can also save thousands and thousands of your hard earned money.

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.

You may be surprised at some of the savings you can make. Quick example, 25 year mortgage borrowing 100,000 at 5%. 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. We’ll use the same mortgage example figures but pay 100 extra. 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. 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.

In the example where we paid an extra 100 every month and shortened the mortgage by six years. A six year saving translates into about a forty grand saving in cash. You can do what you like with this extra as it never needs to be paid to your lender.

In conclusion we listed a few benefits of a fixed rate mortgage. Not only do you get set monthly payments, you get to sleep easy at night because of it. We also had a look at a mortgage overpayment calculator and the potential savings that can be had.

A mortgage overpayment calculator lets you know how much you can save by paying a bit extra each month. If you can afford it.

The trick is to pay a little extra each month, say 600 if you usually pay 500.

The savings made at the end may stagger you. We’re talking thousands saved and years knocked off.

It’s difficult to give examples as everyone’s situation is different, it’s best if you put your own figures into an overpayment calculator and see what comes out.

As a general example though if you had a hundred thousand mortgage and had a 5% interest rate, you’d be paying about 580 a month.

If you could pay 680 every month your mortgage would be finished in just over 18 years and you’d save 20 grand in interest fees.

Add into that you don’t have to pay anything for the last 6 years of an original 25 year deal.

I think that you should most certainly make overpayments if you can. The interest saved snowballs into huge savings later on.

I can give you another example, but paying 200 extra instead of 100. Yes this is much more but the savings are vast.

If you did pay this two hundred extra you would save almost ten years off the mortgage and save cash to the sum of 32 thousand. They are really eye opening figures.

The other bonus of course is the money you would save if you finished the mortgage early. You don’t have to pay anything for those last few years, and this could be a lot of money.

You could save yourself another 40 thousand because you aren’t paying the 580 per month for the last 6 years.

All these savings are going in your pocket and that’s got to be appealing.

We have been brainwashed over the years by the financial industry to believe we have to keep the mortgage for the agreed period but this is pure rubbish.

Would you keep your mortgage for 25 years if you became rich overnight? My guess is not, and with overpayments you can also reduce the length of your mortgage.

However, your lender won’t tell you any of this!