We’ll discover what the fixed rate mortgage is, and its benefits. Then prepare to be amazed at the savings made with a mortgage overpayment calculator. You get security from the fixed rate mortgage & you may get a nice surprise from the overpayment calculator.

Of the various types of mortgage available, the fixed rate is only one of them. The interest rate is fixed, usually for a number of years. If the interest rate remains static, so do your monthly payments.

Are there any benefits to a fixed rate mortgage? A fixed rate of interest means a fixed monthly mortgage payment. You can benefit by knowing your monthly payment is fixed which allows you to budget more effectively.

It doesn’t matter how much interest rates rise, your payments are fixed. In our recent history there have been some frightening short term interest rate rises. If the rates rose drastically over a short term those on variable mortgages could struggle to meet payments.

There is a situation when maybe you should think twice about a fixed rate mortgage. You may decide you need to move house, or even have an unexpected child and simply need more room. Either of these events will cause you to trigger an unwanted redemption penalty.

Most fixed rate mortgages come tied to a nasty redemption penalty. When you can least afford it you could have a charge slapped on you. Think hard before you take a fixed rate mortgage as these charges can really disrupt your plans.

You might like to think about paying a small extra overpayment each month as you go through the length of your mortgage. You are not tied to make the same payments for the duration of the mortgage, usually 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 best reasons to paying a bit extra every month? If you consistently pay extra in the early years of your agreement you can knock several years off the length. By paying a bit extra now, the savings mount up substantially later on.

What does a mortgage overpayment calculator do? You can enter all the relevant figures from your particular deal. 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 we take a mortgage of 100,000 borrowed over 25 years and assume you get an average 5% interest rate. Just by paying an extra 50 every month could see you knock over 3 years off and save over 12 grand.

That example is paying just 50 extra every month. What if you could afford 100 a month to overpay? We’ll use the same mortgage example figures but 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 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 go back to the extra 100 each month where we managed to shave six years off. 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 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 had a look at a mortgage overpayment calculator and the potential savings that can be had.