We are going to investigate what a fixed rate mortgage can do for you.
We’ll then look at using a mortgage overpayment calculator.
From definite security with the fixed rate mortgage to potential cash saved with the overpayment calculator.

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

Do fixed rate mortgages have any plus points?
You benefit by not having the yo-yo effect on your monthly payments. They stay the same every month.
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 the not too distant past there have been some real scary rate rises.
People on variable rate mortgages are much more likely to be affected by rapid rises in interest rates.

There can be certain circumstances when a fixed rate mortgage may not be right for you.
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.

A redemption penalty is a charge that almost always comes with a fixed rate deal.
These charges can be pretty steep, and come at a time when you don’t need the extra stress.
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 may have a fixed rate but it doesn’t mean your payments have to be fixed if you can afford extra.
The lenders would love you to do this but they will rarely tell you that you can indeed pay extra.

What are the best reasons to paying a bit extra every month?
The extra payments reduce the sum owed quicker and the result is you save years off the term of your deal.
You can save a shedload of cash as well as knock a few years off.

In what way does a mortgage overpayment calculator work?
You input various figures relating to your mortgage.
You can put various amounts in as the overpayment. Feel free to play around with this figure.

You get a resulting figure out of the calculator in years you can shave off.
It also gives you a figure in cash that you can expect to save.
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.
You could save over twelve thousand and shorten the mortgage by more than 3 years just by paying an extra 50 each month.

That example is paying just 50 extra every month. What if you could afford 100 a month to overpay?
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.

An extra advantage is you won’t have any payments to make during the last few years of the mortgage.
It’s definitely a reality for you to be free of your mortgage years before planned.
Of course your lender will never tell you this, you have to discover this on your own.

In our example where we saved six years off the length with a hundred a month overpayment.
You pay nothing more for the last 6 years of the term, which equates to about another 40 grand saved.
You don’t pay this money to your lender so you get to keep it, either save it or spend it.

In this article we’ve looked at the potential of fixed rate mortgages.
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.