Mortgage Amortization Calculator Canada

Canadian Mortgage Formulas:

\[ I_k = B_{k-1} \times r \] \[ P_k = M - I_k \] \[ B_k = B_{k-1} - P_k \] \[ r = (1 + \frac{i}{2})^{\frac{1}{6}} - 1 \]

Loan Amount (CAD):

Annual Interest Rate:

Amortization Period:

years

Payment Frequency:

Monthly Payment (CAD):

Total Interest (CAD):

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1. What is a Canadian Mortgage Amortization Calculator?

Definition: This calculator computes mortgage payments and generates an amortization schedule following Canadian mortgage standards.

Purpose: It helps Canadian homebuyers understand their mortgage payments, interest costs, and principal reduction over time.

2. How Does the Calculator Work?

The calculator uses standard Canadian mortgage formulas:

\[ I_k = B_{k-1} \times r \] \[ P_k = M - I_k \] \[ B_k = B_{k-1} - P_k \] \[ r = (1 + \frac{i}{2})^{\frac{1}{6}} - 1 \]

Where:

\( I_k \) — Interest portion of payment k (CAD)
\( P_k \) — Principal portion of payment k (CAD)
\( B_k \) — Remaining balance after payment k (CAD)
\( r \) — Effective periodic interest rate (decimal)
\( M \) — Total payment amount (CAD)
\( i \) — Annual interest rate (decimal)

Explanation: Canadian mortgages use semi-annual compounding, which requires converting the annual rate to an effective periodic rate.

3. Importance of Mortgage Amortization

Details: Understanding amortization helps borrowers see how much interest they'll pay over the loan term and how extra payments can reduce costs.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, amortization period (1-30 years), and payment frequency. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Why is Canadian mortgage calculation different?
A: Canadian mortgages use semi-annual compounding by law, unlike monthly compounding common in other countries.

Q2: What's the difference between amortization and term?
A: Amortization is the total repayment period (typically 25 years), while term is the length of your contract (typically 5 years).

Q3: How does payment frequency affect my mortgage?
A: More frequent payments (bi-weekly vs monthly) can reduce interest costs and shorten amortization.

Q4: Can I see the full amortization schedule?
A: This calculator shows summary results. For a full schedule, use our advanced Mortgage Amortization Schedule tool.

Q5: Are property taxes included in this calculation?
A: No, this calculates principal and interest only. Property taxes and insurance would be additional.