Mortgage Rate Impact Calculator
Compare two mortgage interest rates to see the difference in monthly payment and total interest paid over the life of the loan.
When a mortgage interest rate rises — due to a fixed-rate term ending, a Bank of England base rate increase, or refinancing — your monthly payment changes. Knowing the new payment helps you budget and plan ahead.
Standard mortgage payment formula: M = P × r(1 + r)ⁿ / ((1 + r)ⁿ − 1)
Where:
- M = monthly payment
- P = remaining loan balance (principal)
- r = monthly interest rate (annual rate / 12)
- n = remaining months on the loan
Worked example: Remaining balance: £200,000 Previous rate: 2.5% → previous monthly payment calculation: r = 0.025/12 = 0.002083, n = 240 months (20 years) M = £200,000 × 0.002083 × (1.002083)²⁴⁰ / ((1.002083)²⁴⁰ − 1) M = £200,000 × 0.002083 × 1.6436 / 0.6436 M = £1,062/month
New rate rises to 5.0%: r = 0.05/12 = 0.004167 M = £200,000 × 0.004167 × (1.004167)²⁴⁰ / ((1.004167)²⁴⁰ − 1) M = £1,320/month
Monthly increase = £258. Annual increase = £3,096.
What to do when your rate rises:
- Overpay if possible before the rate rises — reduces the principal
- Consider fixing for a longer term to lock in current rates
- Compare remortgaging costs vs rate rise cost
- Check if your lender offers rate switching without exit fees
Types of UK mortgages affected:
- Tracker mortgages: rate moves with Bank of England base rate instantly
- SVR (Standard Variable Rate): lender’s discretion, usually rises with base rate
- Fixed-rate: protected until fix period ends, then reverts to SVR