Let's find out just what a fixed rate mortgage is, and how it may benefit you. We'll then look at using a mortgage overpayment calculator. With the fixed rate mortgage comes security. With the mortgage overpayment calculator comes potential savings
A fixed rate mortgage is a special type of mortgage where you have a fixed interest period. The interest rate is fixed, usually for a number of years. Locked in interest rates mean locked in monthly payments.
Are there any benefits to a fixed rate mortgage? A fixed rate of interest means a fixed monthly mortgage payment. You get to budget easier every month as your payments remain the same.
No matter what the average interest rate is, your rate will stay the same. There have been some alarming short term interest rate rises in our recent history. 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. Either of these events will cause you to trigger an unwanted redemption penalty.
Nearly all fixed rate mortgages have a redemption penalty attached. When you can least afford it you could have a charge slapped on you. 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 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 best reasons to paying a bit extra every month? You can easily shave years of your mortgage. Be debt free much earlier. By paying a bit extra now, the savings mount up substantially later on.
In what way does a mortgage overpayment calculator work? It uses figures from your mortgage. Amount, interest rate, length of term etc. You can enter a figure that you may think about paying as an extra payment each month.
The calculator will then tell you how many years you might reduce your mortgage by. It also gives you a figure in cash that you can expect to save. Putting bigger figures in the overpayment box will show bigger savings and even more time saved.
You might be pleasantly surprised at the savings to be made. If you borrowed a hundred thousand at five percent over twenty five years. 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? 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 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.
If we revisit the example where we knocked more than six years off the mortgage. This shortening of the mortgage by six years saves you another 40,000 or more. You don't pay this money to your lender so you get to keep it, either save it or spend it.
To recap we had a look at what benefit a fixed rate mortgage has for you. Regular payments and a good night sleep. We also had a look at a mortgage overpayment calculator and the potential savings that can be had.
Article Source: the-Articles.com
About the Author
Author: MontyBurn
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Showing posts with label standard mortgages. Show all posts
Showing posts with label standard mortgages. Show all posts
Saturday, June 27, 2009
Friday, June 19, 2009
Could A Mortgage Overpayment Calculator Help You?
Before we start to answer the question in the title. Let's explain what a mortgage overpayment calculator actually is.
Most overpayment calculators come on websites. You could get a standalone bit of software or a spreadsheet to do the job though.
You simply enter the terms of your particular mortgage, or even one you are planning and it throws out figures that tell you how much cash and how many years you could save.
Many people fail to realise (or are not told) that the usual 25 year terms aren't fixed. If you can afford to pay extra you can reduce this by years. If you can afford to pay extra you should.
Basically what an overpayment calculator tells you is if you pay X amount of cash extra each month then you knock Y amount of cash & years of your mortgage.
Sometimes the saving can be staggering. And these savings are yours not the lenders.
OK, back to the question in the title. What could it do for you? The answer depends on your circumstances.
Amounts borrowed and individual mortgages come in many different flavours. But it matters not if you can make a few overpayments as it will still reduce the length. Which is good tidings for you.
If I give you an example of a 100,000 mortgage at 5% interest over 25 years. If you could pay an extra 100 each month from month one. You'd save over 6 years and 20 grand.
Now I don't know how you feel but If I could afford to pay that extra then I most certainly would.
The same mortgage but paying only 50 extra a month still knocks off three and a half years and 12 thousand. Still very nice savings.
In the six years saved in the example you make no payments at all. Many people forget that fact.
This means you don't pay, but save another 40 thousand over the last six years.
If you can't afford or don't plan to make long term payments then at least try to make some extra payments early on. This early overpayment can compound nicely later on making hefty savings.
If you have or are thinking of getting a mortgage you owe it to yourself to have a play with a mortgage overpayment calculator and put your particular figures in it. You may be staggered at what comes out.
Mind you, your lender won't want you to know all this!
Article Source: the-Articles.com
About the Author
Author: MontyBurn
Monty Burn was head of the Voluntary Mortgage Regulator until his sacking for helping too many people
Visit the National Debt Solution Center Website
Resources and Information About Loan Modification
Find the Answers You Need and Get Help Today
Lower Your House Payments with Expert Attorney Assistance
Most overpayment calculators come on websites. You could get a standalone bit of software or a spreadsheet to do the job though.
You simply enter the terms of your particular mortgage, or even one you are planning and it throws out figures that tell you how much cash and how many years you could save.
Many people fail to realise (or are not told) that the usual 25 year terms aren't fixed. If you can afford to pay extra you can reduce this by years. If you can afford to pay extra you should.
Basically what an overpayment calculator tells you is if you pay X amount of cash extra each month then you knock Y amount of cash & years of your mortgage.
Sometimes the saving can be staggering. And these savings are yours not the lenders.
OK, back to the question in the title. What could it do for you? The answer depends on your circumstances.
Amounts borrowed and individual mortgages come in many different flavours. But it matters not if you can make a few overpayments as it will still reduce the length. Which is good tidings for you.
If I give you an example of a 100,000 mortgage at 5% interest over 25 years. If you could pay an extra 100 each month from month one. You'd save over 6 years and 20 grand.
Now I don't know how you feel but If I could afford to pay that extra then I most certainly would.
The same mortgage but paying only 50 extra a month still knocks off three and a half years and 12 thousand. Still very nice savings.
In the six years saved in the example you make no payments at all. Many people forget that fact.
This means you don't pay, but save another 40 thousand over the last six years.
If you can't afford or don't plan to make long term payments then at least try to make some extra payments early on. This early overpayment can compound nicely later on making hefty savings.
If you have or are thinking of getting a mortgage you owe it to yourself to have a play with a mortgage overpayment calculator and put your particular figures in it. You may be staggered at what comes out.
Mind you, your lender won't want you to know all this!
Article Source: the-Articles.com
About the Author
Author: MontyBurn
Monty Burn was head of the Voluntary Mortgage Regulator until his sacking for helping too many people
Visit the National Debt Solution Center Website
Resources and Information About Loan Modification
Find the Answers You Need and Get Help Today
Lower Your House Payments with Expert Attorney Assistance
Thursday, June 11, 2009
Fixed Rate Mortgage - Good Or Bad?
We are going to investigate what a fixed rate mortgage can do for you. We will also look into how a mortgage overpayment calculator might save you lots of cash. From definite security with the fixed rate mortgage to potential cash saved with the overpayment calculator.
There are a few different types of mortgage, the fixed rate being only one of them. You get a fixed interest period for several years. Locked in interest rates mean locked in monthly payments.
Are there any benefits to a fixed rate mortgage? Because your payments stay the same you don't get ups and downs in your monthly payments. You get to budget easier every month as your payments remain the same.
Your payment is locked so it really doesn't matter what the general rates are doing. In our recent history there have been some frightening short term interest rate rises. Being on a variable rate leaves you susceptible to the rapid rise of your monthly payment.
Under certain circumstances, a fixed rate mortgage could be a mistake. 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. In situations like these you may need to redeem the mortgage and pay a hefty redemption penalty on the fixed rate mortgage.
Nearly all fixed rate mortgages have a redemption penalty attached. When you can least afford it you could have a charge slapped on you. These unexpected charges can hurt. Consider carefully whether a fixed rate is the one for you.
A consideration during your mortgage term is to pay a bit extra each month on top of your normal payment. You may not realize but you can pay any amount over the minimum monthly payment. 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? The extra payments reduce the sum owed quicker and the result is you save years off the term of your deal. Not only do you save years but you save piles of cash, usually many thousands.
What do you do with a mortgage overpayment calculator? You enter your mortgage details. The amount borrowed, the length, the interest rate etc. You can then play around by changing the figure you can afford to overpay.
The calculator will then tell you how many years you might reduce your mortgage by. You get the expectant cash saving as well. 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 we take a mortgage of 100,000 borrowed over 25 years and assume you get an average 5% interest rate. You could save over twelve thousand and shorten the mortgage by more than 3 years just by paying an extra 50 each month.
The last example was an overpayment of 50 every month, but what happens if you pay 100 extra. 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.
One more advantage is that the years you save are payment free, nothing at all to pay. By paying a little extra now, you could easily be mortgage free well before you ever expected. You never get info like this from your lender. This sort of stuff is kept quiet by the industry.
If we look at the example where we paid 100 extra and knocked over 6 years off the length. This shortening of the mortgage by six years saves you another 40,000 or more. You can do what you like with this extra as it never needs to be paid to your lender.
We've looked at some of the advantages of a fixed rate mortgage. Regular payments and a good night sleep. We also looked at potential savings by paying extra each month. Every little helps.
Article Source: the-Articles.com
About the Author
Author: MontyBurn
Visit the National Debt Solution Center Website
Resources and Information About Loan Modification
Find the Answers You Need and Get Help Today
Lower Your House Payments with Expert Attorney Assistance
There are a few different types of mortgage, the fixed rate being only one of them. You get a fixed interest period for several years. Locked in interest rates mean locked in monthly payments.
Are there any benefits to a fixed rate mortgage? Because your payments stay the same you don't get ups and downs in your monthly payments. You get to budget easier every month as your payments remain the same.
Your payment is locked so it really doesn't matter what the general rates are doing. In our recent history there have been some frightening short term interest rate rises. Being on a variable rate leaves you susceptible to the rapid rise of your monthly payment.
Under certain circumstances, a fixed rate mortgage could be a mistake. 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. In situations like these you may need to redeem the mortgage and pay a hefty redemption penalty on the fixed rate mortgage.
Nearly all fixed rate mortgages have a redemption penalty attached. When you can least afford it you could have a charge slapped on you. These unexpected charges can hurt. Consider carefully whether a fixed rate is the one for you.
A consideration during your mortgage term is to pay a bit extra each month on top of your normal payment. You may not realize but you can pay any amount over the minimum monthly payment. 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? The extra payments reduce the sum owed quicker and the result is you save years off the term of your deal. Not only do you save years but you save piles of cash, usually many thousands.
What do you do with a mortgage overpayment calculator? You enter your mortgage details. The amount borrowed, the length, the interest rate etc. You can then play around by changing the figure you can afford to overpay.
The calculator will then tell you how many years you might reduce your mortgage by. You get the expectant cash saving as well. 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 we take a mortgage of 100,000 borrowed over 25 years and assume you get an average 5% interest rate. You could save over twelve thousand and shorten the mortgage by more than 3 years just by paying an extra 50 each month.
The last example was an overpayment of 50 every month, but what happens if you pay 100 extra. 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.
One more advantage is that the years you save are payment free, nothing at all to pay. By paying a little extra now, you could easily be mortgage free well before you ever expected. You never get info like this from your lender. This sort of stuff is kept quiet by the industry.
If we look at the example where we paid 100 extra and knocked over 6 years off the length. This shortening of the mortgage by six years saves you another 40,000 or more. You can do what you like with this extra as it never needs to be paid to your lender.
We've looked at some of the advantages of a fixed rate mortgage. Regular payments and a good night sleep. We also looked at potential savings by paying extra each month. Every little helps.
Article Source: the-Articles.com
About the Author
Author: MontyBurn
Visit the National Debt Solution Center Website
Resources and Information About Loan Modification
Find the Answers You Need and Get Help Today
Lower Your House Payments with Expert Attorney Assistance
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