1. What is a Canadian Mortgage Calculator?

Definition: This calculator computes monthly mortgage payments for Canadian loans using the standard Canadian mortgage formula.

Purpose: It helps homebuyers and property investors estimate their monthly mortgage payments under Canadian compounding rules.

2. How Does the Calculator Work?

The calculator uses the formula:

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

Where:

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

Explanation: Canadian mortgages compound semi-annually, requiring this special calculation to determine the effective monthly rate.

3. Importance of Mortgage Calculation

Details: Accurate mortgage calculations help borrowers budget effectively, compare loan options, and understand their long-term financial commitments.

4. Using the Calculator

Tips: Enter the loan amount in CAD, annual interest rate (without % sign), and loan term in years. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Why is Canadian mortgage calculation different?
A: Canadian law requires interest to compound semi-annually rather than monthly, resulting in slightly different effective rates.

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

Q3: What's a typical Canadian mortgage term?
A: Most mortgages have 25-year amortization with 5-year terms, but terms can range from 1-10 years.

Q4: How does changing the term affect payments?
A: Shorter terms mean higher payments but less total interest. Longer terms lower payments but increase total interest.

Q5: Are results accurate for variable rate mortgages?
A: Yes, but only for the current rate. Variable rates change with the prime rate over time.