Example scenario
Loan amount – 500K, loan period – 20 yrs
Interest rate original / hike – 1% / 5%
Monthly payment original / increase – 2.3K / 3.3K
That is a 30 percent increase in monthly loan payments for a 4 percent rate increase.
Why?
Calculated using online calculator
In: 0
Depends on where you’re at in your mortgage payments. The early payments of a mortgage are almost all interest and no principle. A raise in interest rate at this point is going to significantly affect the payment amount since you now owe more in intrest in the same amount of payments.
This is why you shouldn’t ever get an adjustable rate mortgage.
Latest Answers