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We’ll have a look at what benefits there are to a fixed rate mortgage for you. Then prepare to be amazed at the savings made with a mortgage overpayment calculator. The fixed rate gives you security for a while & the overpayment calculator might give you a pleasant surprise.

Of the various types of mortgage available, the fixed rate is only one of them. Usually for a period of several years, you get a fixed rate of interest. The interest rate you pay is locked; therefore your monthly payments are also locked.

Do fixed rate mortgages have any plus points? Your payment is fixed because your particular interest rate is fixed. You can plan your monthly spending easier knowing your mortgage won’t go up unexpectedly.

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. A rapid rise over a year or so could really see payments rise for those on standard variable mortgages.

There can be certain circumstances when a fixed rate mortgage may not be right for you. The arrival of a new child could mean you need a bigger home and need to move. These are reasons to avoid fixed rate mortgages. Any sort of situation like this can cause unexpected charges by way of redemption penalties.

Fixed rate mortgages nearly always come bundled with a 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.

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. 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.

If you do pay extra each month, are there any benefits to this? The extra payments reduce the sum owed quicker and the result is you save years off the term of your deal. You also save a lot of money in the process, sometimes a staggering amount.

What do you do with a mortgage overpayment calculator? You input various figures relating to your mortgage. You can enter a figure that you may think about paying as an extra payment each month.

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.

You may be surprised at some of the savings you can make. If you had a 25 year mortgage and borrowed 100 grand at 5% interest. By paying an extra fifty each month could save you over 3 years and 12 thousand.

The last example was an overpayment of 50 every month, but what happens if you pay 100 extra. Using the same figures in the mortgage but substituting 100 extra for the previous 50 extra. You get to shave over 6 years off the length and over 20 grand saved. That’s pretty good.

An extra benefit is the years you save are free from any payment whatsoever. Being mortgage free a few years early could easily be achieved by paying a bit extra now. You never get info like this from your lender. This sort of stuff is kept quiet by the industry.

If we revisit the example where we knocked more than six years off the mortgage. A six year saving translates into about a forty grand saving in cash. This is money you can spend or save as it’s not going to your lender every month.

There you have a few benefits of going for a fixed rate mortgage. Regular payments and a good night sleep. We also had a look at the savings to be made by paying a bit extra every month. It all adds up.