1. What is the RBC Mortgage Payment Calculator?

Definition: This calculator computes the monthly mortgage payment for RBC (Royal Bank of Canada) mortgages using their standard interest calculation method.

Purpose: It helps homebuyers estimate their monthly mortgage payments when considering an RBC mortgage.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

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

Explanation: RBC uses semi-annually compounded interest rates, which requires converting the annual rate to an effective monthly rate.

3. Importance of Mortgage Payment Calculation

Details: Accurate payment estimation helps with budgeting and ensures you can comfortably afford your mortgage payments.

4. Using the Calculator

Tips: Enter the loan amount (principal), annual interest rate (e.g., 5.0 for 5%), and amortization period in years (typically 25).

5. Frequently Asked Questions (FAQ)

Q1: Why does RBC use this calculation method?
A: Canadian mortgages typically use semi-annual compounding, which differs from the monthly compounding used in some other countries.

Q2: Does this include property taxes and insurance?
A: No, this calculates only the principal and interest payment. Your actual payment may be higher when including taxes and insurance.

Q3: How accurate is this calculator?
A: It provides a close estimate, but your actual payment may vary slightly based on rounding and specific loan terms.

Q4: What's the difference between term and amortization?
A: Amortization is the total repayment period (e.g., 25 years), while term is the length of your current rate agreement (e.g., 5 years).

Q5: Can I calculate bi-weekly payments?
A: For bi-weekly payments, divide the monthly rate by 2 and adjust the number of payments accordingly.