What Happens to My Mortgage Payment if Interest Rates Double??

Kelly Hudson • April 5, 2022

 Are you freaked out with all the negative press lately about rising interest rates?  


One thing you can do to alleviate that fear is to educate yourself.  


Let’s ask few questions – what is your current mortgage rate? How much are your monthly payments? 


What would happen if your Fixed mortgage rates doubled, when it comes time to renew (typically 5 years)? Will you be able to afford your home? Will you have to adjust your lifestyle?


Does a doubling of the interest-rate double your mortgage payment? The short answer is NO it does not.


Let’s discuss the math and the logic.


I have used 25-year amortization, the maximum allowed for purchases with less than 20% down payment. This is usually the first-time home buyers – which tend to be the highest risk group.


I’ve used a $100,000 mortgage as an example, which makes it easy to do the math for higher mortgages.

The net monthly payment increase, at the 5-year renewal would be $134.94 per $100K of the original mortgage balance.


The net monthly payment increase, at the 5-year renewal refinanced over 25 years would be $73.02 per $100K of the original mortgage balance.


Now for the Logic:


Think of how much money you made 5 years ago… do you make more money now? Do you think your household income will increase over the next 5 years? Do you think your additional income would be enough to offset what you would pay if your mortgage interest rate doubled?


Over 5 years, an average family would experience an increase in household income.


How do rising mortgage rates affect you personally? 


After looking at the math and the logic, clearly a doubling of mortgage interest rates would be unlikely to cause any kind of significant crisis for most average homeowners, and there are options available:

  • refinancing your mortgage to lock into current rates 
  • increase your current principal payment and accelerate your mortgage repayment – this way your principal amount is lower when you’re refinancing.


Rising mortgage rates are discussed frequently and will continue to be discussed, as long as people have mortgages.


The best way to you prepare for the adversity of higher interest rates, is to shrink your mortgage balance as much and as quickly possible, especially with the current low mortgage rates, so more of your money pays off the principal.  


If you have any further questions about mortgages, let’s chat.


My services for a typical mortgage are FREE and I help people save money. I LOVE my job!


Kelly Hudson
Mortgage Broker
Mortgage Architects
Mobile 604-312-5009
Kelly@KellyHudsonMortgages.com

KellyHudsonMortgages.com

Kelly Hudson
MORTGAGE ARCHITECTS
RECENT POSTS 

Everything You Need to Know about Mortgage Default Insurance. (updated June 2025)

By Kelly Hudson • June 19, 2025
Home buyers say the #1 obstacle to homeownership is saving enough money for a down payment. Mortgage default insurance (also called mortgage insurance) allows you to purchase a home with as little as 5% down . It protects your lender if you stop making payments. Typically, a 20% or higher down payment is your best option. However, for many Canadians, reaching this amount can be challenging, especially in expensive markets like Greater Vancouver & Toronto. If you don't have enough cash for a 20% down payment, Mortgage Default Insurance can help. How Much Down Payment Do You Need? 

Buying Bare Land in Canada: What You Need to Know

By Kelli Hudson • May 16, 2025
Have you ever dreamed of buying a piece of land and building your very own home from scratch? You're not alone! Buying bare land, especially in beautiful British Columbia, Canada, can be an exciting adventure or a money pit. Before you start dreaming of where to put your future house, there are a few important things you should know. What is Bare Land? Bare land, sometimes called vacant land, is just that—land without any buildings or structures on it. It's an empty canvas waiting for your ideas. But buying bare land isn’t quite the same as buying a house or apartment. It comes with its own set of rules and challenges, especially when it comes to financing. Why is Financing Bare Land Different? When you buy a home, Lenders feel safer lending you money because if something goes wrong, they can sell the house to get their money back. With bare land, it’s different because there’s nothing built yet. It’s harder to sell bare land – than a home. Which makes it riskier for Lenders, therefore they usually have stricter lending rules and higher interest rates to offset the risk. Important Things to Consider About Financing Bare Land: 1. Down Payments Can Be High Raw Land : This is completely untouched land without any utilities like water, sewer, electricity, or roads. Lenders often require a large down payment, sometimes around 50% of the land’s price. Due to the higher perceived risk, many lenders do not lend on raw, undeveloped land. Vacant or Serviced Land : This land already has important utilities (like electricity, water, sewer, gas, telecommunications, and road access) nearby or already installed. Because it's easier to build on, Lenders may require a slightly lower down payment, usually around 35%. 2. Higher Interest Rates and Shorter Loan Terms Interest rates on land loans are generally higher than on regular home loans because of the increased risk. Also, Lenders might offer shorter loan terms. Some lenders may offer loans where you only pay interest for a few years, which can help lower your monthly payments in the short term. 3. Finding the Right Lender There are three main places to get a land loan: Traditional Banks : Major banks sometimes provide land loans but usually with strict rules, high down payments, and higher interest rates. Credit Unions : Local credit unions can often have more flexible rules and may offer better terms, especially if the land is within their local lending area. Private Lenders : Companies specifically dealing with land financing. They offer customized loans but typically charge fees for borrowing the money and higher interest rates.