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Canada Mortgage Payment Calculator

Use this free Canadian calculator to estimate your monthly mortgage payments, and see how rates and amortization affect total cost over time.

Learn how to use this mortgage calculator.

What is a mortgage calculator?

A mortgage calculator helps you understand how much your monthly mortgage payments could be. It can be a useful tool for determining how much of your budget your mortgage payment will require.

Our mortgage payment calculator uses the following data:

If you’re unsure about what numbers to enter, feel free to enter different values and compare the results.

Seeing how different interest rates and home prices affect mortgage amounts can be a worthwhile learning experience.

How to use this mortgage payment calculator

  1. Under “Mortgage Amount,” enter the amount of money you expect to borrow. This will be the difference between the home’s price and your down payment.
  2. Under “Amortization Period”, choose the total length of your mortgage loan.
  3. Under “Interest Rate”, enter a potential rate you might pay. If you’re unsure, check Canada’s current mortgage rates to get an idea of a reasonable number.
  4. Under “Payment Frequency”, choose a payment schedule.
  5. Under “Down Payment,” enter the amount of your down payment. A down payment is the cash you pay upfront for a home, and home equity is the value of the home, minus what you still owe. “Down Payment %” will fill out automatically and tell you how much equity you’ll start your purchase with.
  6. Under “Term” choose how long you’d like to go before needing to renew your mortgage.

To calculate additional costs, enter figures for:

Costs included in a mortgage payment

Principal

The principal is the original amount of money loaned to a borrower.

If you purchase a $500,000 home and borrow $400,000 from a lender to do so, that $400,000 is your principal.

Interest

Interest is the amount a lender charges a borrower for providing a loan.

Mortgage interest is based on a percentage of the amount borrowed, but the calculation is a little more complicated than that. If you receive a 5% interest rate on a $500,000 mortgage, for example, you’ll be paying back way more than $25,000.

That’s because mortgage interest is compounded. That means you pay interest on your outstanding interest charges. And since lenders spread your interest costs across the life of your loan, you’ll almost always have an outstanding balance that can be charged further interest. 

For fixed-rate loans, interest is compounded semi-annually, or twice a year. For variable-rate loans, compounding can occur more frequently.

The more often interest compounds, the more you’ll wind up paying.

Property taxes

Property tax is a recurring fee homeowners pay their municipal governments. 

Property tax rates vary by region, and are based on assessments that determine the market value of land or a building. Property taxes are levied against both detached homes and attached properties, like condo units or townhouses.

How often property taxes are paid also depends on the municipality where a home is located. They may be collected annually, semi-annually or quarterly, and can be paid either directly to the municipality or as part of a mortgage payment.

Home insurance

Home insurance policies protect property owners by compensating them in the event of unforeseen — and unwelcome — circumstances. Common home insurance policies cover damage to a home and other structures on the same lot, theft of an owner’s belongings and injuries sustained by visitors.

Homeowners aren’t legally required to get insurance for their properties, but most mortgage lenders require buyers to secure home insurance before agreeing to close on a loan. If a home they help a borrower purchase is destroyed or suffers costly damage that the homeowner can’t afford, they want to ensure that they’ll be repaid. 

Mortgage insurance

Mortgage insurance, also known as “mortgage default insurance” or “CMHC insurance” is an additional cost paid by homeowners who purchase a home with a down payment smaller than 20%.

Mortgage insurance protects lenders in the event homeowners fall behind on their payments and default on their loans. Technically, lenders pay for the insurance, but they pass the cost onto their borrowers. Insurance premiums vary depending on the size of the down payment.

Mortgage insurance can be fully paid off upfront or added to a borrower’s monthly mortgage payment.

Can mortgage payments change?

Short answer: possibly. But it depends what kind of mortgage a borrower decides to take on.

If a borrower agrees to a fixed-rate mortgage, for example, their payments will not change for the length of the loan term. That kind of certainty is what makes fixed-rate mortgages so popular (and more expensive.)

With variable mortgages, where the interest rate can rise or fall over the life of the loan, there are two ways payments can change.

If a variable-rate mortgage product involves fixed payments, the monthly payment stays the same whether interest rates increase or decrease, but the amount put toward the principal and interest charges adjusts. If the interest rate rises, for example, more of the payment will go toward covering interest charges. This can extend the length of a mortgage.

With other kinds of variable-rate mortgages, the monthly payment itself will increase or decrease depending on what’s happening with the interest rate it’s attached to.   

Payments can also change if you refinance your mortgage

Ways to reduce your monthly mortgage payment

Choose a lower interest rate

Depending on what options are provided by your lender, you may have the option of choosing a mortgage that charges a lower interest rate.

A mortgage with a 4.5% interest rate might not appear to be significantly cheaper than one that charges 4.65%, but shaving even a few percentage points off an interest rate can save you thousands of dollars over the course of your mortgage.

Make a bigger down payment

Saving up and making a larger down payment will reduce the amount of money you need to borrow. 

The most obvious benefit will be paying less interest on your mortgage. But a larger down payment can also help you arrange a shorter mortgage amortization period or smaller monthly payments.

Making a bigger down payment can also help you secure a better interest rate on your mortgage. You’ll have more equity in your home straight away, which makes you less of a risk in the eyes of lenders.

Choose a longer loan term

While choosing a longer loan term will result in a greater number of payments and more interest charges overall, spreading your mortgage out over a longer period will also result in smaller monthly payments. 

You might end up paying more for your mortgage that you would with a shorter mortgage term, but the extra breathing room every month can be a game-changer if you’re a homeowner on a tight budget. 

Refinance (if you already own your home)

If you’ve owned your home for a while, have been keeping on top of your mortgage payments and have good credit overall, refinancing your home loan can also help you reduce your monthly mortgage payment.

When you refinance, you essentially begin a new mortgage. That gives you an opportunity to negotiate a lower interest rate and a new payment schedule, both of which can help lower your monthly obligations. 

Refinancing is mostly beneficial if rates are noticeably lower than they were when you first got your mortgage. Otherwise, the short-term costs involved, which can include steep pre-payment charges for breaking your mortgage, can outweigh the long-term benefits.

Reasons to use a Canadian mortgage calculator

A mortgage calculator can teach you quite a lot about how the various components affect the cost of a home loan.

1. See how different interest rates affect total cost

Plug a few different interest rates into the calculator and you’ll quickly see how a few percentage points can have a huge impact on a borrower’s mortgage costs. 

Canadian mortgage rates have been on the rise lately, and are expected to keep climbing. Inflation is still more than three times the 2 percent rate the Bank of Canada is targeting, so they’ll almost certainly be hiking the overnight rate again before the year’s out. There’s a high probability that the next rate decision, planned for December 2022, will boost variable rates by at least another 0.5 percent. 

Some analysts expect national variable mortgage rates to increase to 5.55% before the end of 2022, and fixed rates to hit 5.30%. Factoring in the mortgage stress test, that could mean qualifying at a rate in excess of 7%, which is going to be a stretch for many homebuyers in many markets. If buyers can lock in at a lower rate, they should strongly consider it.

2. See the impact of your down payment

Find out how increasing your down payment decreases both your overall mortgage costs and your monthly mortgage payments.

3. Choose the right amortization period

Playing around with the amortization period, or the length of your mortgage, allows you to compare what your monthly mortgage payments will be under different scenarios.

4. Determine the best payment frequency

Making payments bi-weekly or weekly instead of monthly can shorten the length — and significantly reduce the cost — of a mortgage. Find out if you can afford those extra payments. 

5. Choose the right mortgage term

Canada’s mortgage lenders offer a range of mortgage terms to choose from, but they tend to carry different interest rates that will impact the cost of your home loan. 

6. See the impact of additional costs

Buying a home requires a lot more than just paying off the mortgage. You’ll have to keep on top of your property taxes and potentially a host of other charges. Factoring these costs into your mortgage calculations is important for understanding just how far you might need to stretch your budget in order to afford a home.

7. Estimate your mortgage payments before applying

A mortgage calculator can be a source of both good news and its not-so-good counterpart.

If the figures you wind up with fit well within your budget, applying for a mortgage becomes a little less stressful. But if the estimated monthly payments are beyond what you can afford, even with a long amortization period and the lowest realistic mortgage rate, it might not be the ideal time to move forward with a loan application.

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