How this calculator works
The calculator works out the repayment on your loan at both the fixed and the floating rate, over the same term, then adds up the interest each one charges over a comparison period you choose. Both are ordinary table loans that compound monthly, so at the same rate they cost the same; the difference comes only from the rates you enter.
Interest difference = floating interest over the period − fixed interest over the period
The comparison period matters because a floating rate can move while a fixed rate cannot. This calculator holds both rates steady across the period, so it shows the comparison at today's rates rather than trying to predict where floating rates will go.
Worked example
Take a $500,000 loan over 30 years, comparing a 6.2% fixed rate with a 6.9% floating rate over a 2-year period. The fixed rate has the lower repayment and charges less interest over the two years, so it comes out cheaper at these rates. That advantage holds only while the floating rate stays above the fixed one; if floating rates fall below 6.2% during the period, the floating loan would start to close the gap and could end up cheaper.
What changes the answer
- The rate gap — the difference between the two rates drives the whole comparison.
- Comparison period — a shorter period reflects a near-term fix; a longer one assumes today's rates hold, which floating rates rarely do.
- Need for flexibility — floating allows unlimited extra repayments and free switching; fixing does not.
- Your tolerance for change — fixing buys repayment certainty; floating trades that for the chance to benefit if rates fall.
A note on accuracy
This calculator computes both schedules on full, unrounded figures and rounds only for display. It holds both rates constant over the comparison period and does not predict floating-rate movements or model a break fee for switching mid-term. For general guidance, see Sorted, and our methodology for the formulas and sources.