User Guide Rate Sensitivity Tool
Unsure whether to choose a lower variable rate or a higher fixed mortgage?
Use this calculator to identify your ‘Financial Safety Window.’ By modeling projected rate movements, you can estimate the exact month and interest rate level where a lower starting rate would begin to result in a financial loss compared to a fixed rate. This clarity helps you decide between the flexibility of a short-term variable rate or the security of a long-term fixed rate.
Back to Rate Sensitivity Tool
Worked Example
| Name: (Optional) | |||
| Loan: | Borrowing amount. | Term: | Mortgage term for repayment calculation. |
| Rate1: | Variable or discounted rate to compare. | Rate2: | Alternate fixed rate. |
| Increase (fixed): | Under normal circumstances Bank of England sets rate changes by 25 basis points at a time. | Every / months: | Your prediction for how often rate changes will happen e.g 3 = every 3 months. This setting can also be used to manage larger rate changes by shortening the period. |
| Rate Term: | Default set for 2 years. | ||
| Saving / m: | Monthly gain / loss while the rate is lower. | Saving / Period: | Total gain / loss per period. |
| Breakeven Month: | Calculates the “Crossover Point” where the early-term interest savings are fully offset by later-term rate increases. | Breakeven Rate: | Same as breakeven month, but for the rate. |
| Breakeven Monthly: | The point to which monthly payments needs to rise before resulting in a loss. |
