Mortgage Stress-Test Calculator

A mortgage stress test checks whether you could still afford your extension borrowing if interest rates rose. Lenders do not test the rate you were quoted. They test a higher stressed rate, and under the FCA rule MCOB 11.6.18R they have to. This calculator models your monthly payment at that stressed rate so you can see what the lender is really testing for before you apply.

Enter your borrowing amount, the term, your headline rate, and your lender's reversion rate. The result compares three payment levels: the headline payment, the reversion-rate payment, and the stressed payment. The gap between the first and the last is the number that decides whether your application passes.

What the stress test actually checks

The stressed rate is built from two parts. The first is your lender's reversion rate, the standard variable rate your deal drops onto once the fixed period ends. The second is a stress margin added on top. Market practice puts that margin at 1-3, and each lender chooses its own figure within that band. The calculator applies the upper bound as its default, because that is the conservative view you have to be able to withstand.

This affordability stress test is the single most common reason a mortgage is declined when the borrower can clearly afford the current rate. The lender is not asking whether today's payment works. It is asking whether the payment still works for at least five years if rates climb, which is exactly what MCOB 11.6.18R requires.

Budget against the stressed payment, not the headline

The headline rate is the one that gets advertised, so it is the one homeowners anchor to. That is the trap. A payment that feels painless at a low rate can become a serious monthly commitment once the reversion rate and the stress margin are added. UK base rate has sat at those higher levels before, and the stress test exists precisely so lenders do not hand out borrowing that only works while rates stay low.

The choice of borrowing route matters here too. A further advance from your existing lender, a remortgage, and a second charge all face the same stress test, but they carry different rates, fees, and early repayment positions. If you are mid-way through a fixed deal, an early repayment charge can make a full remortgage more expensive than a higher-rate alternative, even after the stress test is passed.

A worked walk-through

Take a homeowner planning a further advance to fund a rear extension. They enter the amount they want to borrow and a repayment term, then their headline rate and their lender's published reversion rate. The calculator computes the monthly payment at the headline rate, then again at the reversion rate, then again at the stressed rate (reversion plus the 1-3 margin).

The stressed monthly payment shown at the top is the figure to plan against. If you could not comfortably service that payment alongside your existing outgoings, the lender's affordability model will most likely decline the application, and even if it did not, the borrowing would be larger than your budget can safely carry. Before you commit, a mortgage broker can confirm the exact margin your chosen lender uses. For the wider decision about which route to take, see financing your extension.