RBC Mortgage Formula:
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Definition: This calculator computes monthly mortgage payments according to RBC's specific calculation method for Canadian mortgages.
Purpose: It helps homebuyers estimate their monthly mortgage payments when considering an RBC mortgage product.
The calculator uses RBC's mortgage formula:
Where:
Explanation: The formula first calculates the effective monthly rate using RBC's semi-annual compounding method, then applies the standard mortgage payment formula.
Details: Accurate mortgage calculations help borrowers understand their financial commitments and budget appropriately for home ownership.
Tips: Enter the loan amount in CAD, annual interest rate (without % sign), and select the amortization period. All values must be > 0.
Q1: Why does RBC use this specific calculation method?
A: Canadian mortgages typically use semi-annual compounding, which requires this special calculation to determine the effective monthly rate.
Q2: Does this include property taxes and insurance?
A: No, this calculates only the principal and interest portion of your mortgage payment.
Q3: How does changing the amortization period affect payments?
A: Longer amortization reduces monthly payments but increases total interest paid over the life of the loan.
Q4: What's the difference between term and amortization?
A: Amortization is the total repayment period (e.g., 25 years), while term is the length of your current mortgage contract (typically 1-5 years).
Q5: Are RBC mortgage rates negotiable?
A: Yes, mortgage rates are often negotiable based on your financial situation and relationship with the bank.