Calculator guide
Compare an adjustable-rate mortgage's introductory payment with an estimated payment after one rate reset.
Formula or method
The initial payment amortizes P over the full term; the balance after k payments is P(1+r)^k − M[((1+r)^k−1)/r], then the adjusted payment amortizes that balance over the remaining months at the new rate.
How to use this calculator
- Enter the loan, initial rate, adjusted rate, full term, and fixed period.
- Review the initial payment and estimated balance at adjustment.
- Compare the new payment and remember that the actual loan may have caps and several resets.
Worked example
For $320,000 at 5.5% over 30 years with a 5-year period, the initial payment is about $1,816.92; the balance after 60 payments is about $295,874. At 7% over the remaining 25 years, the estimated payment is about $2,091.18.
Understanding the result
The result is a two-rate scenario, not a forecast. It assumes one change exactly at the entered fixed period and no rate cap.
Limitations and assumptions
- Does not model periodic or lifetime caps, floors, index margins, payment caps, or negative amortization.
- Excludes taxes, insurance, fees, and lender-specific adjustment rules.
Frequently asked questions
Does the rate always change after the fixed period?
The calculator assumes the entered adjusted rate for comparison; your note and loan documents control.
Why can payment rise sharply?
A higher rate and shorter remaining repayment period increase the payment.
Is this a safe affordability test?
No. Stress-test several rates and confirm terms with a qualified lender.
Sources
Educational scenario only; not financial advice or a mortgage offer.