Refinance Mortgage Calculator RBC

Mortgage Payment Formula:

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

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

Loan Principal (P):

CAD

Annual Interest Rate (i):

Amortization Period:

Monthly Payment (M):

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1. What is a RBC Refinance Mortgage Calculator?

Definition: This calculator estimates monthly mortgage payments for RBC refinancing using Canadian mortgage calculation standards.

Purpose: Helps homeowners evaluate refinancing options by calculating new monthly payments based on loan amount, interest rate, and amortization period.

2. How Does the Calculator Work?

The calculator uses two formulas:

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

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

Where:

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

Explanation: The calculator first converts the annual rate to RBC's effective monthly rate (accounts for semi-annual compounding), then calculates the payment.

3. Importance of Mortgage Refinancing Calculation

Details: Accurate payment calculations help determine if refinancing will improve your financial situation by lowering payments, reducing term, or accessing equity.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate (without % sign), and select amortization period. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Why does RBC use this special rate calculation?
A: Canadian mortgages typically use semi-annual compounding, requiring this conversion for accurate monthly payments.

Q2: What's included in the monthly payment?
A: This calculates principal and interest only. Taxes and insurance would be additional.

Q3: How accurate is this calculator?
A: It provides estimates within pennies of RBC's official calculations for fixed-rate mortgages.

Q4: Can I use this for variable rate mortgages?
A: This works best for fixed rates. Variable rates may use different calculation methods.

Q5: How does refinancing affect my total interest paid?
A: Extending your amortization typically increases total interest, while shorter terms reduce it, even if payments are higher.