Fixed Rate Mortgage - Is It Worth It?
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.
A fixed rate mortgage is one of the various types available. 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 are the advantages of a fixed rate mortgage? A fixed rate of interest means a fixed monthly mortgage payment. It's a lot easier to plan financially knowing your payment will be the same.
No matter what the average interest rate is, your rate will stay the same. In the not too distant past there have been some real scary rate rises. 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. Moving home in the next year or so. Having a planned or even unplanned child can be reasons to avoid fixed rate mortgages. Any sort of situation like this can cause unexpected charges by way of redemption penalties.
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.
One thing to consider while having the mortgage is to pay a bit extra every month if you can afford it. It's not set in stone that you have to pay the same minimum amount every month. 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? 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 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.
The calculator will then tell you how many years you might reduce your mortgage by. You get to see how much money you could possibly save. The figures in years and cash saved will increase the more you overpay each month.
You may be amazed by how much you could save. If you had a 25 year mortgage and borrowed 100 grand at 5% interest. By paying an extra fifty each month could save you over 3 years and 12 thousand.
Now an example of 100 extra instead of 50 extra. Paying 100 extra every month using the same example mortgage. 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.
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. This is money you can spend or save as it's not going to your lender every month.
We've looked at some of the advantages of a fixed rate mortgage. You get to sleep easy in the knowledge your payment will stay the same month after month. Also consider the huge potential in making a little overpayment every month. Even small amounts will add up. - 16931
A fixed rate mortgage is one of the various types available. 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 are the advantages of a fixed rate mortgage? A fixed rate of interest means a fixed monthly mortgage payment. It's a lot easier to plan financially knowing your payment will be the same.
No matter what the average interest rate is, your rate will stay the same. In the not too distant past there have been some real scary rate rises. 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. Moving home in the next year or so. Having a planned or even unplanned child can be reasons to avoid fixed rate mortgages. Any sort of situation like this can cause unexpected charges by way of redemption penalties.
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.
One thing to consider while having the mortgage is to pay a bit extra every month if you can afford it. It's not set in stone that you have to pay the same minimum amount every month. 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? 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 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.
The calculator will then tell you how many years you might reduce your mortgage by. You get to see how much money you could possibly save. The figures in years and cash saved will increase the more you overpay each month.
You may be amazed by how much you could save. If you had a 25 year mortgage and borrowed 100 grand at 5% interest. By paying an extra fifty each month could save you over 3 years and 12 thousand.
Now an example of 100 extra instead of 50 extra. Paying 100 extra every month using the same example mortgage. 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.
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. This is money you can spend or save as it's not going to your lender every month.
We've looked at some of the advantages of a fixed rate mortgage. You get to sleep easy in the knowledge your payment will stay the same month after month. Also consider the huge potential in making a little overpayment every month. Even small amounts will add up. - 16931
About the Author:
Monty Burn was once in charge of the Voluntary Mortgage Regulator. He was forced out becuase he was saving borrowers too much cash! Find out how to get a top fixed rate mortgage deal at his site. You could also try our overpayment calculator on your mortgage and see what you could save.
posted by Edgar at
00:13
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