Interest Rate Change Calculator
See exactly what a change in mortgage interest rate does to your monthly payment and to the total cost over the remaining term.
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A rate change of one percent sounds minor and is not. On a long mortgage it moves the monthly payment by a noticeable amount and the total cost over the term by a very large one, because the difference is charged on a big balance for a long time.
This is worth running before a fixed period ends, before committing to a variable rate, and before assuming a stress test is a formality. The stress test exists precisely because this arithmetic is unforgiving.
How it is worked out
The standard payment formula is applied twice over the same balance and remaining term, once at each rate, and the two are compared. Holding the term constant is what isolates the effect of the rate itself.
Worked example
A 300,000 balance with 25 years left pays about 2,026 a month at 6.5%. At 7.5% that becomes roughly 2,217 — 191 more each month. Across the remaining 300 months, the single percentage point costs about 57,400.
Stress-test yourself
Run your own balance at two or three percentage points above today rate and check the payment is still one you could meet. If it is not, that is worth knowing while you still have options such as a longer fix, a smaller loan or a larger deposit.
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Create your free property pageFrequently asked questions
How much does one percent really matter?
On a 300,000 balance over 25 years it is close to 190 a month and roughly 57,000 over the term. The monthly figure is survivable for most borrowers; the lifetime figure is why fixing at the right moment is worth real money.
Should I fix or stay variable?
Fixing buys certainty at a small premium, which is worth most when your budget has little slack or the payment is large relative to income. Variable can cost less on average but requires the capacity to absorb rises without distress.
What happens when my fixed period ends?
The loan usually reverts to the lender standard variable rate, which is typically well above market. Start looking three to six months before the end — that reversion rate is where the largest avoidable cost sits.
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