Mortgage Payment Calculator – MoneySense
For the majority of Canadians, buying a home will be the most important purchase they have ever made, and getting a mortgage is an essential part of this process. But how do you make sure you get a mortgage that you can actually afford long-term? This is where a mortgage payment calculator comes in.
Why use a mortgage payment calculator?
It can be difficult to grasp exactly how much a mortgage will cost you over the long term, especially if you factor in interest. A mortgage payment calculator is an essential tool that will help you understand what your payments will be over time. It also gives you a clearer idea of what you can afford.
By using a mortgage calculator to estimate your payments, you will have a more realistic picture of the options available to you and will be in a better position to evaluate mortgage products. In short, a mortgage payment calculator can help you see how a mortgage fits into your current financial plans, as well as how it affects your future goals.
How are mortgage payments calculated?
By entering a few key figures into a mortgage payment calculator, you will obtain a reliable estimate of the amount of your regular payment. Here are the most important variables that determine your mortgage payments:
- Deposit amount : The amount of your down payment and the purchase price of your home will determine how much money you will need to borrow for your mortgage. (Note: you will need the minimum down payment required in Canada, which is tied to the value of the home.) Your mortgage amount is calculated by subtracting the down payment from the purchase price. If your down payment is less than 20% of the purchase price, you will need to add the cost of mortgage loan insurance. Our calculator does it for you: simply enter the purchase price of the house and the amount of your down payment.
- Amortization period: The number of years it will take you to pay off the entire mortgage. Amortization should not be confused with the term of the mortgage loan, which corresponds to the period during which your mortgage contract is in force. Buyers typically complete several terms before repaying the loan. Borrowers with a down payment of less than 20% must have mortgages amortized over 25 years or less. Those with more than 20% also have access to 30 year mortgages.
- Interest rate: The interest rate you will pay on any outstanding mortgage balance. Your price will depend economy trends and the terms of your mortgage, for example if you decide to opt for a fixed Where variable rate, among other factors.
- Payment frequency: The interval at which you make your mortgage payments. The calculator above lets you select monthly, bi-weekly, or accelerated semi-monthly payments; however, borrowers can sometimes also choose from semi-monthly, weekly, and weekly accelerated payment options. The frequency of your payments will influence the number of payments you make per year and the amount of each payment. This also impacts the amount of interest you will pay over the life of the loan. The more frequent your payments, the faster you will pay off the debt.
To calculate your mortgage payments, enter these details into the mortgage payment calculator. (The calculator will automatically display the best rates available in your area, but you can also enter your own rate.) The calculator then displays monthly payments in four different scenarios, based on the information you provided. You can change any of the variables to see how your regular mortgage payment would be affected.
If your down payment is less than 20% of the purchase price, the cost of mortgage loan insurance is automatically calculated and integrated into your regular mortgage payment.
How to manually calculate your mortgage payments
When you need to quickly calculate what your mortgage payment will be, you should probably use a mortgage payment calculator. However, if you prefer to write things down or just want to understand the math behind your mortgage payments, you can use the formula below:
Monthly payment = P x (I x (1 + I)^N ) / ((1 + I)^N – 1)
P = Mortgage capital
I = Monthly interest rate
N = Number of payment periods