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We’ll have a look at what benefits there are to a fixed rate mortgage for you. 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.

A fixed rate mortgage is a special type of mortgage where you have a fixed interest period. A fixed period of interest that may be a couple or several years. Because the interest rate is fixed, so are your monthly payments.

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.

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 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. You also save a lot of money in the process, sometimes a staggering amount.

How do you use 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.

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.

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.

One more advantage is that the years you save are payment free, nothing at all to pay. You could be free of the shackles of your mortgage early by paying a little more now. You will never hear this from your lender though; it’s simply not in their interests to tell you to pay off early.

In our example where we saved six years off the length with a hundred a month overpayment. A six year saving translates into about a forty grand saving in cash. This saving is yours as you will never need to give it to your lender as you originally planned.

There you have a few benefits of going for a fixed rate mortgage. Not only do you get set monthly payments, you get to sleep easy at night because of it. Also consider the huge potential in making a little overpayment every month. Even small amounts will add up.