Mortgage Payment Formula:
Where:
From: | To: |
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.
The calculator uses the formula:
Where:
The effective monthly rate is calculated as:
Where \( i \) is the annual interest rate (decimal).
Details: Accurate mortgage calculations help borrowers understand their financial commitments, compare loan options, and budget effectively.
Tips: Enter the loan amount in CAD, annual interest rate (%), and loan term in years. All values must be > 0.
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.