Canada Mortgage Loan Calculator Monthly Payment

Mortgage Payment Formula:

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

Monthly Payment (PMT):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the Mortgage Payment Formula?

The mortgage payment formula calculates the fixed monthly payment required to fully amortize a loan over its term. It's used by Canadian banks like RBC, TD, and Scotiabank to determine mortgage payments.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula:

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

Where:

\( P \) — Principal loan amount (CAD)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Total number of payments (term in years × 12)
\( PMT \) — Monthly payment amount (CAD)

Explanation: The formula accounts for both principal and interest payments over the loan term, with payments remaining constant while the principal/interest ratio changes over time.

3. Importance of Accurate Mortgage Calculation

Details: Understanding your exact mortgage payment helps with budgeting and ensures you can comfortably afford your home. Even small rate differences can significantly impact total interest paid.

4. Using the Calculator

Tips: Enter the principal amount in CAD, annual interest rate (e.g., 4.79 for 4.79%), and loan term in years. For variable rate mortgages, use current rates but understand payments may change.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical Canadian mortgage rate?
A: As of 2023, rates range from 4.5% to 6.5% for fixed-rate mortgages, depending on term length and creditworthiness.

Q2: How does amortization affect payments?
A: Longer amortization (e.g., 30 years) reduces monthly payments but increases total interest paid. Standard amortization is 25 years.

Q3: Are property taxes included?
A: No, this calculates principal + interest only. Canadian homeowners must budget separately for property taxes and insurance.

Q4: What about CMHC insurance?
A: For down payments less than 20%, CMHC insurance premiums (2.4%-4% of loan) are typically added to the mortgage.

Q5: How accurate is this calculator?
A: It provides precise calculations for fixed-rate mortgages. Variable rates or complex terms may require bank-specific calculators.