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We’ll discover what the fixed rate mortgage is, and its benefits.
We’ll then look at using a mortgage overpayment calculator.
You get security from the fixed rate mortgage & you may get a nice surprise from the overpayment calculator.

A fixed rate mortgage is a special type of mortgage where you have a fixed interest period.
You get a fixed interest period for several years.
Locked in interest rates mean locked in monthly payments.

Do fixed rate mortgages have any plus points?
Your payment is fixed because your particular interest rate is fixed.
You can benefit by knowing your monthly payment is fixed which allows you to budget more effectively.

If the bank base interest rate starts to rise, yours will stay as it is.
In our lifetime we have already seen some distressing interest rate rises.
People on variable rate mortgages are much more likely to be affected by rapid rises in interest rates.

Under certain circumstances, a fixed rate mortgage could be a mistake.
If you think you may move home, or even have another child and need an extra bedroom, then think carefully before taking a fixed rate mortgage.
Either of these events will cause you to trigger an unwanted redemption penalty.

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.

A consideration during your mortgage term is to pay a bit extra each month on top of your normal payment.
You don’t have to make the same payment month after month for 25 years.
Lenders prefer you to make payments like this but they never inform you that you could pay extra if you wish.

If you do pay extra each month, are there any benefits to this?
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 does a mortgage overpayment calculator do?
It uses figures from your mortgage. Amount, interest rate, length of term etc.
You also enter a figure that you want to overpay. You can play around with this figure.

The calculator will show you how many years you can expect to shorten your mortgage by.
It will tell you what sort of cash lump sum you can expect to save as well.
Both the years and cash saved obviously increase if you put in a higher overpayment figure.

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.

Nice savings on a 50 extra payment. But what happens if you pay an extra 100 though?
Using the same example mortgage from earlier we now pay 100 extra.
You can knock a staggering 6 years or more off the length and save yourself in the region of 20 thousand.

One more advantage is that the years you save are payment free, nothing at all to pay.
By paying a little extra now, you could easily be mortgage free well before you ever expected.
Of course your lender will never tell you this, you have to discover this on your own.

If we go back to the extra 100 each month where we managed to shave six years off.
This shortening of the mortgage by six years saves you another 40,000 or more.
This is money you can spend or save as it’s not going to your lender every month.

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 had a look at the savings to be made by paying a bit extra every month. It all adds up.

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.
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 mortgage being only one of them.
Usually for a period of several years, you get a fixed rate of interest.
If the interest rate remains static, so do your monthly payments.

What, if any, are the up sides to fixed rate mortgages?
No need to worry about fluctuating interest rates. Your rate and your payments are fixed.
You can plan your monthly spending easier knowing your mortgage won’t go up unexpectedly.

If the bank base interest rate starts to rise, yours will stay as it is.
In our recent history there have been some frightening short term interest rate rises.
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.
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.

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.
There is never a good time to be hit with extra charges so think carefully before taking the fixed rate mortgage.

One thing to consider while having the mortgage is to pay a bit extra every month if you can afford it.
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.

If you do pay extra each month, are there any benefits to this?
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.

What does a mortgage overpayment calculator do?
Enter all the figures that relate to your mortgage.
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.
It also tells you what sort of financial saving you can expect to make.
The figures in years and cash saved will increase the more you overpay each month.

You might be pleasantly surprised at the savings to be made.
If you had a 25 year mortgage and borrowed 100 grand at 5% interest.
Just by paying an extra 50 every month could see you knock over 3 years off and save over 12 grand.

Now an example of 100 extra instead of 50 extra.
Using the same example mortgage from earlier we now pay 100 extra.
In this new example the time saved is over six years and the financial saving is more than twenty thousand.

An extra benefit is the years you save are free from any payment whatsoever.
By paying a little extra now, you could easily be mortgage free well before you ever expected.
Lenders will not tell you this, they like to keep this a secret.

If we go back to the extra 100 each month where we managed to shave six years off.
This shortening of the mortgage by six years saves you another 40,000 or more.
This is 40 grand in your pocket and not your lenders. Overpaying is difficult, make no mistake, but the rewards can be amazing.

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 looked at potential savings by paying extra each month. Every little helps.