Loan Amortization Schedule Calculator Canada Ontario

Loan Payment Formula:

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

Monthly Payment:

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1. What is a Loan Amortization Schedule?

A loan amortization schedule is a table showing each periodic payment on a loan (typically a mortgage) over time. It shows how much of each payment goes toward principal versus interest, and how the loan balance decreases over time.

2. How Does the Calculator Work?

The calculator uses the standard loan payment formula:

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

Where:

\( PMT \) — Monthly payment amount
\( P \) — Principal loan amount (CAD)
\( r \) — Monthly interest rate (annual rate divided by 12)
\( n \) — Number of payments (loan term in months)

Explanation: The formula calculates the fixed monthly payment required to fully repay a loan over its term, accounting for compound interest.

3. Importance of Amortization Schedules

Details: Understanding your amortization schedule helps you see the true cost of borrowing, plan for prepayments, and understand how much equity you're building in your property over time.

4. Using the Calculator

Tips: Enter the principal amount in CAD, annual interest rate (as a percentage), and loan term in years. The calculator will show your monthly payment and generate an amortization schedule.

5. Frequently Asked Questions (FAQ)

Q1: Are Ontario mortgage rates different from other provinces?
A: While rates are generally similar across Canada, some provincial programs or taxes might affect overall costs.

Q2: How does compounding frequency affect my mortgage?
A: In Canada, mortgage interest is typically compounded semi-annually, which is accounted for in the quoted rate.

Q3: What happens if I make extra payments?
A: Extra payments reduce your principal faster, saving you interest and potentially shortening your amortization period.

Q4: Are there prepayment penalties in Ontario?
A: Many mortgages allow some prepayment (typically 10-20% annually) without penalty, but check your specific terms.

Q5: How does the mortgage stress test affect my borrowing?
A: Canadian borrowers must qualify at a rate higher than their contract rate, which may reduce the amount you can borrow.