Mortgage Calculator
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Down payment percentage: 20.0%
* This calculator provides estimates only. Actual payments may vary based on lender terms, fees, and other factors.
How Canadian Mortgage Payments Are Calculated
In Canada, mortgage interest is compounded semi-annually — not monthly like in the U.S. This is required by the Interest Act and means your effective monthly rate is slightly different from the advertised annual rate. Our calculator accounts for this correctly using the Canadian compounding formula.
Your monthly payment covers two things: principal (repaying the loan) and interest (cost of borrowing). In the early years of a 25-year amortization, most of your payment goes to interest. By year 15, more of each payment reduces the principal. This is called the amortization schedule.
The amortization period (typically 25 years) is how long it takes to pay off the mortgage completely. The mortgage term (typically 5 years) is how long your rate and lender contract lasts before renewal. You renew multiple times during the full amortization.
Fixed vs. Variable Rate: Which Should You Choose?
Fixed Rate
Your rate and payment stay the same for the full term (e.g., 5 years). Better for budget certainty and risk-averse borrowers. Historically costs slightly more over the long run than variable.
Variable Rate
Your rate moves with the Bank of Canada prime rate. Historically saves money over time, but payments can increase. Best if you have a budget buffer and can tolerate rate fluctuations.
Frequently Asked Questions
What is the difference between amortization and mortgage term?
The amortization period is how long it takes to pay off the mortgage in full (e.g., 25 years). The term is how long your rate and conditions are locked in with your current lender (e.g., 5 years). You renew your term multiple times during the amortization.
How does Canadian mortgage compounding work?
Canadian mortgages compound interest semi-annually, not monthly. The advertised rate is a nominal annual rate, but effective monthly interest is calculated using the semi-annual compounding formula. Our calculator applies this correctly.
How much does a $100,000 mortgage cost per month?
At 5.5% over 25 years, a $100,000 mortgage costs approximately $595/month. At 4.5%, it drops to about $543/month. Use the calculator above with your specific numbers for an accurate estimate.
Can I make extra payments on my mortgage?
Most Canadian mortgages allow lump-sum prepayments of 10%–20% of the original principal per year, plus the ability to increase regular payments. This reduces your amortization and saves significant interest. Check your lender's specific prepayment privileges.
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