Stress-Testing Your Mortgage: Can You Handle Higher Rates?

A simple way to test your budget against rate rises and falling income.

4 min read · Mortgage & Property

Life situations: Buying or renting home

Interest rates can change quickly. A stress test shows whether you could cope with a worse scenario.

Raise the rate

Recalculate your payments at 3 %, 4 % and 5 %. Banks use about 5 % in their affordability test, so this shows how close your budget is to the bank's view.

Lower your income

Test a drop of 20 % in household income, for example through unemployment, illness or a parental break. Include the fixed costs that do not fall.

Prepare your options

• Fix part of the loan for several years.
• Keep an emergency fund of at least six months of housing costs.
• Know how flexible your amortization schedule is.

Run the numbers in the mortgage cost calculator.