Mortgage Rate Calculator RBC

Mortgage Payment Formula:

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

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

Monthly Payment (CAD):

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1. What is the RBC Mortgage Rate Calculator?

Definition: This calculator computes monthly mortgage payments for RBC (Royal Bank of Canada) mortgages using Canadian mortgage rate conventions.

Purpose: It helps homebuyers estimate their monthly mortgage payments based on RBC's interest compounding method.

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:

\( M \) — Monthly payment (CAD)
\( P \) — Loan principal (CAD)
\( r \) — Effective monthly interest rate
\( n \) — Total number of payments

The monthly rate \( r \) is calculated as: \[ r = (1 + \frac{i}{2})^{\frac{1}{6}} - 1 \] where \( i \) is the annual interest rate.

Explanation: Canadian mortgages typically compound semi-annually, requiring this special calculation for monthly payments.

3. Importance of Mortgage Calculation

Details: Accurate payment estimation helps with budgeting, mortgage comparison, and determining affordable home prices.

4. Using the Calculator

Tips: Enter the loan amount in CAD, annual interest rate (e.g., 5.00 for 5%), and loan term in years (typically 25 for Canadian mortgages).

5. Frequently Asked Questions (FAQ)

Q1: Why is the calculation different from standard mortgage formulas?
A: Canadian mortgages use semi-annual compounding by law, requiring a special monthly rate calculation.

Q2: What's a typical RBC mortgage rate?
A: Rates vary but are typically between 3-7% depending on market conditions and your credit profile.

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

Q4: How accurate is this calculator?
A: It provides close estimates but exact payments may vary slightly based on RBC's specific terms.

Q5: Can I use this for other Canadian banks?
A: Yes, all Canadian banks use the same semi-annual compounding method for mortgages.