Mortgage payment calculator

 

How to calculate mortgage payments

Calculating mortgage payments used to be complex, but mortgage payment calculators have made it much easier. Our mortgage payment calculator gives you everything you need to test different scenarios, to help you decide what mortgage is right for you. Here’s a little more information on how the calculator works.

There are several factors that go into estimating how much your regular mortgage payments will be. These 3 numbers are particularly important:

1. The total mortgage amount: This is the price of your new home, less the down payment, plus mortgage insurance, if applicable.

2. The amortization period: This is the total life of your mortgage, and the number of years the mortgage payments will be spread across.

3. The mortgage rate: This is the rate of interest you pay on your mortgage.

How to use the mortgage payment calculator

To use the calculator, start by entering the purchase price, then select an amortization period and mortgage rate. The calculator shows the best rates available in your province, but you can also add a different rate. The calculator will now show you what your mortgage payments will be.

By default, the mortgage payment calculator will show four different monthly payments, depending on the size of your down payment. It will automatically calculate the cost of CMHC insurance. You can change the size of your down payment and the payment frequency to see how your regular payment will be affected

Our calculator also shows you what the land transfer tax will be, and approximately how much cash you’ll need for closing costs. You can also use the calculator to estimate your total monthly expenses, see what your payments would be if mortgage rates go up, and show what your outstanding balance will be over time.

If you’re buying a new home, it’s a good idea to use the calculator to determine what you can afford before you start looking at real estate listings.

How to lower your mortgage payments

There are a few ways to lower your monthly mortgage payments. You can reduce the purchase price, make a bigger down payment, extend the amortization period, or find a lower mortgage rate. Use the calculator to see what your payment would be in different scenarios.

Keep in mind that if your down payment is less than 20%, your maximum amortization period is 25 years. As for finding a lower mortgage rate, it’s a good idea to speak to a mortgage broker for assistance.

What is the minimum down payment required in Canada?

The minimum down payment in Canada depends on the purchase price of the home:

  • If the purchase price is less than $500,000, the minimum down payment is 5%.

  • If the purchase price is between $500,000 and $999,999, the minimum down payment is 5% of the first $500,000, and 10% of any amount over $500,000.

  • If the purchase price is $1,000,000 or more, the minimum down payment is 20%.

Mortgage default insurance, commonly referred to as CMHC insurance, protects the lender in the event the borrower defaults on the mortgage. It is required on all mortgages with down payments of less than 20%, which are known as high-ratio mortgages. A conventional mortgage, on the other hand, is one where the down payment is 20% or higher.

The size of your down payment influences three things

The amount you put down at the beginning of your mortgage shapes three important outputs over the life of the mortgage:

  • The home price you can afford

  • The size of your mortgage and monthly payment

  • The amount of CMHC insurance you pay

Why does your monthly calculator have four columns?

We think it's important for you to compare your options side by side. We start the calculator by outlining the four most common options for down payment scenarios, but you are not limited to those options. We also allow you to vary amortization period as well as interest rates, so you'll know how a variable vs. fixed mortgage rate changes your payment.

What is CMHC Insurance?

CMHC insurance (or mortgage default insurance) protects lenders from mortgages that default. CMHC insurance is mandatory for all mortgages in Canada with down payments of less than 20% (high-ratio mortgages). This is an additional cost to you, and is calculated as a percentage of your total mortgage amount.

What is an amortization schedule?

An amortization schedule shows your monthly payments over time and also indicates the portion of each payment paying down your principal vs. interest. The maximum amortization in Canada is 25 years on down payments less than 20%. The maximum amortization period for all mortgages is 35 years.

Though your amortization may be 25 years, your term will be much shorter. With the most common term in Canada being 5 years, your amortization will be up for renewal before your mortgage is paid off, which is why our amortization schedule shows you the balance of your mortgage at the end of your term.

Your new home awaits.