Mortgage Calculator Canada

Canadian Mortgage Formula:

\[ M = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

where \( r = (1 + \frac{i}{2})^{\frac{1}{6}} - 1 \)

Monthly Payment (CAD):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is a Canadian Mortgage Calculator?

Definition: This calculator computes monthly mortgage payments using Canada's unique semi-annual compounding interest formula.

Purpose: It helps homebuyers and homeowners estimate their mortgage payments accurately under Canadian lending rules.

2. How Does the Calculator Work?

The calculator uses the Canadian mortgage formula:

\[ M = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

where \( r = (1 + \frac{i}{2})^{\frac{1}{6}} - 1 \)

Where:

\( M \) — Monthly payment (CAD)
\( P \) — Loan principal (CAD)
\( r \) — Effective periodic rate (decimal)
\( n \) — Total number of payments (months)
\( i \) — Annual interest rate (decimal)

Explanation: Canadian mortgages use semi-annual compounding but monthly payments, requiring this special rate conversion.

3. Importance of Accurate Mortgage Calculation

Details: Proper calculation ensures you understand your financial commitment and can budget appropriately for home ownership.

4. Using the Calculator

Tips: Enter the loan amount in CAD, annual interest rate (e.g., 5.00 for 5%), and amortization period in years (typically 25).

5. Frequently Asked Questions (FAQ)

Q1: Why is Canadian mortgage calculation different?
A: Canadian lenders use semi-annual compounding by law, unlike monthly compounding common elsewhere.

Q2: Does this include property taxes and insurance?
A: No, this calculates only the principal and interest portion of your payment.

Q3: What's a typical amortization period in Canada?
A: Standard is 25 years, though shorter terms save interest and longer terms (up to 30 years) may be available.

Q4: How does payment frequency affect the calculation?
A: This calculator assumes monthly payments. Other frequencies require adjusted calculations.

Q5: Does this account for variable rate mortgages?
A: It calculates based on current rate. Variable rates would change payments over time.