1. What is the RBC Mortgage Calculator?

Definition: This calculator estimates monthly mortgage payments using RBC Canada's specific interest rate calculation method.

Purpose: It helps home buyers and mortgage holders understand their potential monthly payments when considering an RBC mortgage.

2. How Does the Calculator Work?

The calculator uses the formula:

Where: \( r = (1 + i/2)^{1/6} - 1 \)

Where:

• \( M \) — Monthly payment (CAD)
• \( P \) — Loan principal (CAD)
• \( r \) — Effective monthly interest rate (decimal)
• \( n \) — Number of payments (months)
• \( i \) — Annual interest rate (decimal)

Explanation: RBC uses a semi-annually compounded interest rate converted to a monthly rate, which differs from simple monthly division.

3. Importance of Mortgage Calculation

Details: Accurate mortgage calculations help borrowers understand affordability, budget effectively, and compare different loan options.

4. Using the Calculator

Tips: Enter the loan amount in CAD, annual interest rate (default 5.00%), and loan term in years (default 25). All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Why does RBC use this interest calculation method?
A: Canadian lenders typically compound interest semi-annually by law, requiring this conversion method for monthly payments.

Q2: How does this differ from simple monthly interest?
A: Simple monthly division (i/12) would understate the true interest cost compared to the legal compounding method.

Q3: Does this include taxes and insurance?
A: No, this calculates principal and interest only. Additional costs would increase your actual payment.

Q4: Can I calculate different payment frequencies?
A: This calculator assumes monthly payments. Other frequencies require different calculations.

Q5: How accurate is this calculator?
A: It provides close estimates, but actual RBC mortgage payments may vary slightly due to rounding and specific terms.