Let’s find out just what a fixed rate mortgage is, and how it may benefit 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.

There are a few different types of mortgage, the fixed rate being only one of them. You get your interest rate locked for the period of the deal, usually a few years. If the interest rate remains static, so do 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. You get to budget easier every month as your payments remain the same.

Bank base rates may rise drastically, however yours will be the same because it’s fixed. In the last few decades we have seen interest rates almost double in a few short months. 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. 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.

Nearly all fixed rate mortgages have a redemption penalty attached. These redemption penalties can hit you hard just when you don’t need it. You must think twice before agreeing to a fixed rate deal if a charge like this will badly affect you.

You might like to think about paying a small extra overpayment each month as you go through the length of your mortgage. You don’t have to make the same payment month after month for 25 years. 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? 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 do you do with a mortgage overpayment calculator? 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.

You get to see what sort of length in years you can knock off. You get the expectant cash saving as well. Both the years and cash saved obviously increase if you put in a higher overpayment figure.

You may be surprised at some of the savings you can make. Quick example, 25 year mortgage borrowing 100,000 at 5%. 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.

If you can afford to pay 100 extra instead of 50 what would happen? Using the same figures in the mortgage but substituting 100 extra for the previous 50 extra. You can knock a staggering 6 years or more off the length and save yourself in the region of 20 thousand.

Another plus point is the years you knock off are totally payment free. Being mortgage free a few years early could easily be achieved by paying a bit extra now. You won’t hear this info from any lenders though. You need to discover info like this for yourself.

In the example where we paid an extra 100 every month and shortened the mortgage by six years. We could save a further 40 thousand by not having to pay your lender every month. You don’t pay this money to your lender so you get to keep it, either save it or spend it.

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