How to use the loan rate change schedule calculator
- Enter the loan amount, the starting annual rate and the number of monthly payments, then the date of the first payment.
- Add a row under Rate changes for each time the rate moves. Give the payment number where the new rate starts and the new annual rate. Leave unused rows blank.
- Read the first payment, the highest regular payment and the total interest, then compare the total with the interest you would pay if the rate never changed.
- Open the table of rate periods to see the payment and balance at the start of each one, and download the CSV for the full month by month schedule.
Formula
interest for a month = balance x annual rate / 12
payment after a change = balance x i / (1 - (1 + i)^-m)
i = new annual rate / 12, m = payments still to make
The payment is set again at payment 1 and at every rate change, so the loan is still paid off in the original number of months. When the rate is 0, the payment is the balance divided by the months left.
A 30 year loan with two rate steps
Borrow $250,000 over 360 monthly payments at 4.5%. The first payment is $1,266.71 and stays there for payments 1 to 24, leaving a balance of $241,748.66. At payment 25 the rate rises to 5.5%, so the payment is set again over the 336 payments left: $1,411.73. It holds until payment 60, when the balance is $229,890.60.
At payment 61 the rate rises to 6.75% and the payment becomes $1,588.34 for the rest of the loan. The final payment is $1,588.88 because it clears the last cents. Total interest is $307,725.86. With no changes the same loan costs $206,018.21 in interest, so the two steps add $101,707.65.
How a rate change reaches your payment
On a loan with a changing rate, the lender does not keep the old payment and let the balance drift. It works out the payment that would pay off the remaining balance at the new rate over the remaining months. That is why a rise in the rate lifts the payment even though the balance has barely moved.
The effect is larger early in a long loan, because many months remain and most of each payment goes to interest. Compare the first and last rows of the rate period table to see how the same balance costs more per month at a higher rate.
Where this differs from a real loan
Lenders differ in which day a new rate starts, how they round, whether they limit how far a rate can move in one step and whether the payment is reset at all. Some keep the payment and extend or shorten the term instead. Use this page to see the shape of the cost, then compare the figures with your loan statement. For a loan that adjusts on a fixed pattern, see the ARM Mortgage Calculator. For a fixed rate schedule, use the Amortization Schedule Calculator.
Assumptions and limits
- Interest is charged monthly at one twelfth of the annual rate on the balance after the previous payment, rounded to the cent.
- The payment is set again at payment 1 and at each payment number you list, to pay off the balance in the months that remain.
- The final payment is the leftover balance plus its interest, so the last balance is exactly zero.
- Fees, insurance, taxes, rate caps, skipped payments and extra payments are not modeled. The figures are informational.
Frequently asked questions
Does the loan term change when the rate changes?
No. This page keeps the original number of payments and resets the payment amount at each change so that the balance still reaches zero at the end. Some lenders choose to change the term instead, which this page does not show.
Which payment number should I enter for a rate change?
Enter the number of the first payment whose interest uses the new rate. If the rate changes after payment 24, enter 25. The page does not accept 1, because the starting rate covers the first payment.
Why is the final payment a little different?
Interest and payments are rounded to the cent, so a few cents are left over by the last month. The final payment is set to the leftover balance plus its interest so the loan ends at exactly zero.
Can I use a rate of zero?
Yes. With a rate of 0 the payment is the balance divided by the payments left, and no interest is charged for that stretch. This is useful for a promotional period before a higher rate starts.