Banks calculate the exact impact of any interest rate increase on repayments when assessing whether a borrower is able to afford a variable-rate mortgage. This is something that homeowners should also do.

You’ll avoid the stress and headache of having to do the math after every RBA announcement by calculating the impact of the changes on your budget in advance. If your homeownership costs rise, you’ll be able to make an informed decision at settlement.

We’ll look at how to calculate the cost of each rate increase and create a chart that you can use for reference. Home Loan Experts provide this calculator. This page also includes a video on how to use the calculator. For results in seconds, you can also read the instructions below and follow them:

- 1. Visit our repayment calculator page here.
- 2. Input the amount you wish to borrow, the length of the loan, your rate of interest, and the frequency at which you will be paying back your loan into the calculator. Click the NEXT key.
- 3. Answer the two questions on the screen ‘Contact a Mortgage broker’ as you wish. Select no to both questions if you only want the calculator’s results. Click SUBMIT. Note: If you select yes for either question, then the calculator will request more information to complete your request.
- 4. The Home Loan Experts Calculator will display your repayment as well as a graph that shows how your principal and total balance will change throughout the term of your loan.
- 5. You can see the impact of a change in the interest rate by scrolling to the bottom, clicking RE-CALCULATE, and entering a new interest rate. RBA usually raises or lowers interest rates. Twenty-five percentage point increments (also known as 25 basis points). Try increasing the rate this amount. Enter 3.25% if you are currently at a variable rate of 3.00%.
- 6. Continue to increase the interest rate that you enter in the calculator.
- 7. You can extend the chart to see how much you would have to pay each month if rates rose by five percentage points. You will have a wide range to work with before needing to do any additional calculations.
- 8. Your chart can be referred to at any time, whether for budgeting purposes or peace of mind.