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Mortgage rate hike calculator: How will a rate hike affect you?


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Mortgage rate hike calculator

What is your refund type?

What is your remaining loan amount?

What is your current interest rate?

How much does your rate increase?

With a new interest rate of your monthly payments will increase by .

You could save per year based on Finder’s lowest refinance interest rate

Compare your options in less than a minute.

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How to use the rate hike calculator

Enter the following details into the calculator (or estimate them if you don’t know):

  1. Select your refund type. Most borrowers must repay principal and interest. This means that you repay the loan plus interest. If you are unsure, just select this option for now. If you have an interest-only loan, you only pay the interest each month, but you don’t repay the loan yet.
  2. Enter the remaining amount of your loan. Check your latest home loan statement and see how much you have left to repay on your home loan.
  3. Enter your current interest rate. Again, your home loan statement should show your current interest rate.
  4. Enter the new higher rate. This is your current interest rate plus the amount your lender is increasing. If your current rate is 3.50% and your lender increases their rates by 50 basis points, your new rate is 4.00%.
  5. Enter the remaining term of your loan. Most home loans have a term of 30 years. Estimate how long you have left on your loan, to the nearest year.

How will rising interest rates affect my mortgage?

Even a small increase in interest rates can have a big impact on your monthly repayments. The higher interest rates rise, the more interest you have to pay.

What difference does 0.5% make on a mortgage?

Recently, the Reserve Bank of Australia (RBA) raised interest rates by 0.5%, or 50 basis points, on several occasions. This is a big increase and costs borrowers hundreds of dollars a month.

Here’s a quick example using a fairly average borrower scenario:

Amount of the loan $600,000
Term 30 years
Interest rate 3.50%
Monthly repayment $2,694

Now let’s try again with a higher rate. All other loan details are the same.

Amount of the loan $600,000
Term 30 years
Interest rate 4.00%
Monthly repayment $2,864

Here we see that a rate hike of 50 basis points is equivalent to a monthly cost increase of $170. Over a year, that equates to $2,040 more than you’ll have to pay in interest.

How is an interest rate increase calculated?

To find out how much a rate hike will cost you, you need your loan amount, remaining loan term, and old and new interest rates.

Then you can use the calculator above to get a simple estimate. The calculator simply tells you the difference in monthly repayments between the old and the new rate.

This doesn’t include the cost of any ongoing loan fees you may have, but it’s a simple way to calculate the impact of rate hikes.

My interest rate goes up: what are my options?

Just because interest rates are rising doesn’t mean you’re stuck. There are always better deals on the market.

Even when every lender passes on RBA rate increases, those same lenders often offer slightly lower offers to entice new customers. While leaving their existing customers on higher rates!

This gives you 2 options:

  1. Call your lender and ask for a better deal. It’s a pretty simple trick and one that often works really well if you see your lender has a lower interest rate for new borrowers on their website. Just make sure your loan type is the same as the new one, so it’s a fair comparison. Call your lender and ask for a better deal. If your lender doesn’t budge, tell them you’re going to refinance.
  2. Refinance your home loan. Switching mortgages is easier than you think. Start by checking the interest rates, then start the refinancing process by applying for the new loan.

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