1. What is the Canadian Home Loan EMI Formula?

The Canadian Home Loan EMI formula calculates the fixed monthly payment (Equated Monthly Installment) required to repay a home loan over a specified term. This is the standard calculation used by Canadian banks like RBC, TD, and Scotiabank.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (CAD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Loan term in months (years × 12)
• \( PMT \) — Monthly payment (EMI in CAD)

Explanation: The formula accounts for compound interest over the loan term, calculating a fixed payment that includes both principal and interest components.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps homebuyers budget effectively, compare loan offers from different lenders, and understand the total cost of borrowing.

4. Using the Calculator

Tips: Enter principal amount in CAD, annual interest rate (e.g., 4.79 for RBC's 4.79% rate), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between fixed and variable rate calculations?
A: This calculator assumes a fixed rate. Variable rates would require recalculating as rates change.

Q2: How accurate is this calculator compared to bank calculators?
A: It uses the same standard formula banks use, but doesn't account for insurance or fees.

Q3: What's a typical amortization period in Canada?
A: Most Canadian mortgages have 25-year amortization, though terms are typically 1-5 years.

Q4: How does the stress test affect calculations?
A: Qualifying rates are typically higher than actual rates (e.g., +2% or Bank of Canada benchmark).

Q5: Can I calculate bi-weekly payments?
A: Yes, divide the monthly rate by 2 and multiply term by 26 (for 26 payments/year).