Discover How Mortgage Overpayment Calculators Can Save You Thousands
We’ll have a look at what benefits there are to a fixed rate mortgage for you.
We’ll then take a look at an overpayment calculator for your mortgage.
Security comes with the fixed rate mortgage, whereas huge savings can come with the overpayment calculator.
Fixed rate mortgages are one of a few different types of mortgage available.
The interest rate is fixed, usually for a number of years.
Because the interest rate is fixed, so are 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 benefit by knowing your monthly payment is fixed which allows you to budget more effectively.
Your payment is locked so it really doesn’t matter what the general rates are doing.
There have been some alarming short term interest rate rises in our recent history.
People on variable rate mortgages are much more likely to be affected by rapid rises in interest rates.
There are a few situations when a fixed rate mortgage may be a bad decision.
If you suddenly have an extra family member and need more space. Or you are simply considering moving home soon.
Any sort of situation like this can cause unexpected charges by way of redemption penalties.
Fixed rate mortgages nearly always come bundled with a redemption penalty.
These charges can be pretty steep, and come at a time when you don’t need the extra stress.
If a charge like this will hurt you then you must think very carefully before taking a fixed rate mortgage.
During the term of your mortgage it’s worth considering paying a bit extra each month if your budget will stretch.
You are not tied to make the same payments for the duration of the mortgage, usually 25 years.
Lenders prefer you to make payments like this but they never inform you that you could pay extra if you wish.
What are the up sides to paying extra each and every month?
The extra payments reduce the sum owed quicker and the result is you save years off the term of your deal.
You also save a lot of money in the process, sometimes a staggering amount.
What does a mortgage overpayment calculator do?
You enter your mortgage details. The amount borrowed, the length, the interest rate etc.
You also enter a figure that you want to overpay. You can play around with this figure.
You get to see what sort of length in years you can knock off.
It also gives you a figure in cash that you can expect to save.
Both the years and cash saved obviously increase if you put in a higher overpayment figure.
You might be pleasantly surprised at the savings to be made.
If you borrowed a hundred thousand at five percent over twenty five years.
You could save over twelve thousand and shorten the mortgage by more than 3 years just by paying an extra 50 each month.
Nice savings on a 50 extra payment. But what happens if you pay an extra 100 though?
We’ll use the same mortgage example figures but pay 100 extra.
This saves you more than 20,000 and knocks a respectable 6 years off the term.
An extra advantage is you won’t have any payments to make during the last few years of the mortgage.
By paying a little extra now, you could easily be mortgage free well before you ever expected.
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.
There you have a few benefits of going for a fixed rate mortgage.
You get a good night’s sleep and regular level payments.
We also looked into the future and saw some big savings if you can make a little overpayment now.
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