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Mortgage Rate Calculator Canada

Mortgage Payment Formula:

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

Where:

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

CAD
%
years

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1. What is a Mortgage Rate Calculator Canada?

Definition: This calculator computes monthly mortgage payments using the Canadian interest calculation method.

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

2. How Does the Calculator Work?

The calculator uses the formula:

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

Where:

The effective monthly rate is calculated as:

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

Where \( i \) is the annual interest rate (decimal).

3. Importance of Mortgage Calculation

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

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Why is Canadian mortgage calculation different?
A: Canadian mortgages use semi-annual compounding, which affects how the monthly rate is calculated.

Q2: What's a typical Canadian mortgage rate?
A: Rates vary but historically range between 3-6% for fixed-rate mortgages.

Q3: Does this include property taxes and insurance?
A: No, this calculates only the principal and interest portion of the payment.

Q4: How does amortization affect payments?
A: Longer amortization reduces monthly payments but increases total interest paid.

Q5: Can I use this for variable rate mortgages?
A: Yes, but remember variable rates can change over time.

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