Variable Rate Impact Calculator
See exactly how a rate change hits your monthly payment — model an increase or a cut and watch the dollar impact update instantly.
🇨🇦 CanadaHow this variable rate impact calculator works
A variable-rate mortgage in Canada tracks the lender's prime rate. When prime moves — usually in 0.25% steps following central bank decisions — your effective rate moves with it. This calculator lets you enter a rate change (positive for an increase, negative for a cut) and see how your monthly payment responds.
We first compute your current payment from your balance, current rate, and remaining amortization using the standard formula: payment = balance · r / (1 − (1 + r)⁻ⁿ), with r as the monthly rate (annual ÷ 12) and n as the remaining months. Then we add your rate change to the current rate — floored at 0% — and recompute the payment at that new rate.
The difference between the two is your monthly change, shown with a + sign when the payment rises. Multiply that by twelve and you get the annual change — the real yearly hit (or saving) to your budget. Seeing that figure in dollars is the fastest way to understand whether a rate move is comfortable or whether you should consider locking into a fixed rate.
Use this as a planning tool. Some variable products keep your payment fixed and instead shift the principal/interest split, while others adjust the payment directly; this calculator models the adjusting-payment case. Canadian fixed mortgages compound semi-annually by convention, but this tool uses monthly compounding for consistency. Confirm your product's behavior with a licensed Canadian mortgage professional.
Variable rate questions
On most Canadian variable-rate mortgages, when the lender prime rate moves, your interest rate moves with it. Depending on your product, either your payment changes immediately or more of each fixed payment goes to interest. This calculator models a rate change directly into a new monthly payment so you can see the impact in dollars.
Rate moves usually come in 0.25% increments, tracking central bank decisions. Modelling a +1.00% increase is a common stress test, since several quarter-point hikes can stack up over a year. You can also enter a negative change to see how much a rate cut would lower your payment.
We recompute the standard amortization payment — balance · r / (1 − (1 + r)⁻ⁿ) — using your new rate (current rate plus the rate change), with r as the monthly rate and n as the remaining amortization in months. The difference between the new and current payment is your monthly change, and that times 12 is the annual change.
That depends on your risk tolerance, how much further rates might move, and the gap between current variable and fixed offers. Use this calculator to quantify how a rate increase would stretch your budget, then weigh that against the certainty a fixed rate provides. A licensed mortgage professional can help you decide.
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