Mortgage calculators are everywhere on the internet, however the KeyFacts Mortgage Calculator is unique as it helps you understand and plan for The Interest Rate Rollercoaster.

The KeyFacts Mortgage Calculator works out your payments on today’s rates and helps you work out how you will cope when your interest rate changes.

Interest rates and your repayments will go up and down beyond your control and our calculator helps you plan for the future.

There are 3 different indicators in our calculator to help you set the right loan amount, loan term and also test how competitive your current interest rate is.

The Peak Interest Rate (PIR)

The Peak Interest Rate or PIR is the one you should think about the most. A PIR tells you how high interest rates reached within any given period. When interest rates approach the Peak, foreclosures, mortgage stress and unhappy home owners increase. Don’t be amongst them.

The Peak Interest Rate indicates the height that variable interest rates reached for property loans in a given period.

Peaks aren’t always short lived either.The 15 year PIR started in December 1995 and lasted for 18 months. If you had a competitive loan, your rate would have been around 9.90% p.a. but many borrowers were in double digits. How would that have affected you?

It’s quite possible that, without the Global Financial Crisis, the 5 year PIR of 9.02% in July 2008 may have lasted much longer and rates could have gone much higher. How would that have affected you?

The KeyFacts Mortgage Calculator shows you how much higher your repayments will become if rates return to a 5 year, 5 year and 30 year Peak. As you can see from the Interest Rate Rollercoaster, interest rate pressure will sometimes build over years and on other occasions, explode quite rapidly. Although we can never tell what will happen in the future, looking toward the past can indicate what is possible.

When it comes to planning how much you should borrow, you can forget about all the other interest rates. It’s the PIR that can stress you, hurt you and cost you your property.

Medium Term Rate (MTR)

The Medium Term Rate (MTR) is the average interest rate offered by the major banks (see CBR Below) over the last 15 years.

Under normal circumstances, the MTR is an indication of the interest rate you would have paid on a day to day basis over the past 15 years, however it definitely has limitations and should only ever be taken as a very rough guide.

The KeyFacts Mortgage Calculator calculates your average repayments assuming the MTR over the life of the loan. It is important to remember the MTR is an average rate based on what has happened in the past. Peaks can and probably will significantly exceed the MTR over the time it takes you to repay your mortgage.

Current Benchmark Rate (CBR)

Current Benchmark Rates indicate the interest rate you should be able to match or beat for a top rate, standard variable rate mortgage product.

The Current Benchmark Rate (CBR) is the nominal interest rate (the rate that is used to calculate your daily interest charges) based a good quality, competitive Standard Variable product assuming a loan amount of $250,000, averages across the major banks. This is a rack retail rate which you should actually wind up paying if you compare loan options properly.

It’s shown in blue on the above chart and can vary day to day.

The CBR is an indicator of the maximum interest rate you should be charged for this type of variable rate mortgage. Although there is no standard definition of what a Standard Variable product is, we arrive at the CBR considering current market rates for a variable loan which:

1. Is generally available to borrowers throughout Australia;
2. Can be used for Owner Occupied or Investment purposes;
3. Includes a separate, 100% offset account;
4. Has a range of repayment methods and frequencies;
5. Is available as Principle and Interest or Interest Only;
6. Accepts unlimited extra payments;
7. Includes the ability to redraw extra payments;
8. Offers the ability to be split with other loans (such as Fixed Rates);
9. Is Portable.

If you are paying more than the CBR you can definitely to better. If you are paying less than the CBR may still be able to do better.