1. Canadian Mortgage Payment Calculation

The Canadian mortgage payment formula calculates the fixed periodic payment required to fully amortize a loan over its term. This calculation is standard for most Canadian mortgages.

2. How the Mortgage Calculator Works

The calculator uses the standard mortgage formula:

Where:

• \( PMT \) — Periodic payment amount
• \( P \) — Principal loan amount
• \( r \) — Periodic interest rate (annual rate divided by payment frequency)
• \( n \) — Total number of payments (term in years multiplied by payment frequency)

Explanation: The formula accounts for compound interest and spreads payments evenly over the loan term.

3. Understanding Mortgage Payments

Details: In Canada, mortgage payments typically include both principal and interest. Early payments consist mostly of interest, with the principal portion increasing over time.

4. Using the Calculator

Tips: Enter the loan amount in dollars, annual interest rate as a percentage (e.g., 3.5 for 3.5%), loan term in years, and select your preferred payment frequency.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between monthly and bi-weekly payments?
A: Bi-weekly payments result in 26 payments per year (equivalent to 13 monthly payments), helping pay off the mortgage faster.

Q2: How does the interest rate affect my payment?
A: Higher rates increase payments significantly. A 1% rate increase on a $500,000 mortgage adds about $250 to monthly payments.

Q3: Are property taxes included in this calculation?
A: No, this calculates principal and interest only. Canadian lenders often collect property taxes separately.

Q4: What about mortgage insurance?
A: For high-ratio mortgages (less than 20% down payment), CMHC insurance premiums would be added to the loan amount.

Q5: How accurate is this calculator?
A: It provides standard mortgage payment estimates. Actual payments may vary slightly due to rounding or lender-specific calculations.