How this calculator works
The payment is recalculated on the remaining balance and remaining months at every rate reset. Choose a standard annual-reset hybrid or custom month intervals. Manual rates or a trend provide the uncapped scenario; first-reset, periodic and lifetime limits then constrain each change. Floors constrain downward movement. This is more detailed than a simple annual step model and does not forecast an index. An optional fixed-rate setting provides a comparison.
Formula
New payment = remaining balance × i / (1 - (1 + i)^(-remaining months)). Periodic i = (1 + nominal rate/c)^(c/12) - 1. Reset rate = scenario rate limited by the previous rate plus or minus the applicable change cap, the floor and opening rate plus lifetime cap. Estimated annual borrowing rate = 12 × monthly IRR of net advance and projected payments including allocated fees.
Worked example
At 0%, a $1,200 loan over twelve months starts at $100 monthly. With a custom first reset after six months and a rate path that remains 0%, the remaining six payments stay $100. A $12 annual fee allocated monthly brings total cash outflow to $1,212.
Advertisement
Frequently asked questions
Are these future rates predictions?
No. Enter plausible scenarios or the rates implied by your own index and margin assumptions. Actual reset rates depend on the contract.
What do the caps limit?
The first cap limits the first change, the periodic cap limits later changes in either direction, and the lifetime increase limits the rate above the opening rate. Contract terms can apply caps differently.
Is the estimated rate a legal APR disclosure?
No. It is a nominal annual cash-flow IRR from the entered fees and scenario. Regulatory APR rules classify fees and assumptions by jurisdiction.