1. What is a Canadian Mortgage Payment Calculator?

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

Purpose: It helps homebuyers and homeowners in Canada estimate their mortgage payments based on principal, interest rate, and term.

2. How Does the Calculator Work?

The calculator uses two formulas:

Where:

• \( M \) — Monthly payment (CAD)
• \( P \) — Loan principal (CAD)
• \( r \) — Effective monthly interest rate (decimal)
• \( n \) — Number of monthly payments (term × 12)
• \( i \) — Annual interest rate (decimal)

Explanation: The Canadian formula accounts for semi-annual compounding of interest, which is standard in Canadian mortgages.

3. Importance of Mortgage Calculation

Details: Accurate mortgage calculations help borrowers understand their financial commitments and plan their budgets accordingly.

4. Using the Calculator

Tips: Enter the loan amount in CAD, annual interest rate (default 5%), and loan term in years (default 25). All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: Why is the Canadian formula different?
A: Canadian mortgages typically compound interest semi-annually, unlike the monthly compounding common in other countries.

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 Canadian mortgages have 25-year amortization periods, though terms are typically 1-5 years.

Q4: How does changing the term affect payments?
A: Shorter terms mean higher monthly payments but less total interest paid over the life of the loan.

Q5: Are there prepayment penalties in Canada?
A: Many Canadian mortgages have prepayment penalties if you pay off the mortgage early or make large lump sum payments.