Mortgage Payment Calculator
Sep 17, 2024Use our mortgage payment calculator to estimate your monthly mortgage payments in Canada. Enter your loan details to get an accurate and quick assessment of your mortgage costs.
- Tips for using this mortgage payment calculator
Why should I use a mortgage payment calculator?
A mortgage calculator can teach you a lot about the variables that affect the cost of a home loan. Our mortgage payment calculator can help you:
Understand how different mortgage interest rates can affect the cost of your mortgage.
See the impact the size of your down payment has on your monthly payments and the overall cost of your mortgage.
Select an amortization period that aligns with your homeownership goals.
Find a payment frequency that fits your budget.
Decide on a term length for mortgage scenarios that work for you.
Estimate your mortgage budget before you start reaching out to lenders.
How do I use this mortgage payment calculator?
In the “Property Value” field, enter the price of the home you intend to buy or use the slide tool to indicate a price.
In the “Down Payment” field, enter the amount of your down payment. You can use a dollar figure or a percentage of the home’s listing price.
In the “Interest Rate” field, enter a potential mortgage interest rate. If you’re unsure of what value to enter, check Canada’s current mortgage rates to get an idea of a reasonable number.
In the “Mortgage Term” field, choose how long you’d like to go before needing to renew your mortgage.
In the “Rate Type” field, indicate whether your future mortgage will have a fixed or variable interest rate.
In the “Amortization” field, choose the total length of your mortgage loan.
In the “Payment Frequency” field, indicate how often you’ll make a mortgage payment.
What is a mortgage payment calculator’s “payment breakdown”?
The payment breakdown displayed by a mortgage payment calculator gives you more insight into your amortization schedule. You’ll be able to see how much interest and how much of the principal each payment takes care of, not just for your current mortgage term, but for every year of your amortization period.
What is a mortgage amortization schedule?
An amortization schedule explains how your mortgage payment evolves over the life of your home loan. Tap the drop down arrow associated with each year in the payment breakdown to see the amortization schedule.
If you make no changes to your mortgage during the amortization period, your principal and interest amount will remain constant. But as you pay down your mortgage, the composition of those payments slowly reverses.
At the outset of your mortgage, most of your payment goes toward interest. But by the time you reach the last year of your loan, most of it will be going toward the principal.
- Table of Contents
NerdWallet Canada’s Mortgage Payment Calculator
| Year | Total Paid | Principal Paid | Interest Paid | Balance | |
|---|---|---|---|---|---|
| 2024 | $34,477.54 | $10,261.65 | $24,215.90 | $483,738.35 | |
| 2025 | $34,477.54 | $10,781.14 | $23,696.40 | $472,957.21 | |
| 2026 | $34,477.54 | $11,326.94 | $23,150.60 | $461,630.27 | |
| 2027 | $34,477.54 | $11,900.36 | $22,577.18 | $449,729.91 | |
| 2028 | $34,477.54 | $12,502.82 | $21,974.72 | $437,227.09 | |
| Term Total | $172,387.72 | $56,772.91 | $115,614.80 | $437,227.09 | |
The line above displays the totals at the end of your mortgage term. At this time, you will renew your mortgage and choose among the rates that are available. | |||||
8Twelve has partnered with over 65 Canadian mortgage lenders to provide competitive rates on over 7,000 mortgage products. 8Twelve can quickly match you with a lender and mortgage type that meets your needs — even if your financial situation is unique.
Mortgage payment news and trends: September 2024
Another Bank of Canada rate cut
September brought more good news for anyone making variable mortgage payments. The Bank of Canada reduced its overnight rate for the third consecutive time on September 4, knocking another 25 basis points from lenders’ variable mortgage rates.
After the September rate cut, a homeowner with a $500,000 mortgage whose variable rate dipped from 5.5% to 5.25% would see her monthly mortgage payment reduced from $3,052 to $2,980.
NerdWallet’s monthly Down Payment Monitor
Saving a large down payment is one of the most dependable ways to lower your mortgage costs. Check out our Down Payment Monitor for August 2024 to see how much you might have to save as a home buyer to give yourself a little added breathing room as a homeowner.
Recent mortgage rules mean lower mortgage payments (for some)
As of August 1, first-time home buyers in Canada can secure 30-year amortizations with a down payment of less than 20% — if they’re buying a pre-construction home.
Before the change, only buyers with down payments of 20% or more were eligible for 30-year amortizations.
It’s hard to say how many first-time buyers will take advantage of this new option. Waiting three to five years for a home to be delivered isn’t for everyone, especially if it means paying high rent and trying to save up a deposit in the meantime. Buying pre-construction is fairly risky in the current economic environment, too.
A 30-year amortization can be good for a buyer’s monthly cash flow, though. Here’s a quick example:
Property: $600,000 preconstruction condo.
Down payment: 10% ($60,000).
Interest rate: 4.75%.
Monthly mortgage payment (25-year amortization): $3,159
Monthly mortgage payment (30-year amortization): $2,894
In this scenario, the 30-year amortization would save you $265 a month, but you’d be making payments (and being charged interest) for another five years.
Mortgage payments: What you need to know
What is a mortgage payment?
A mortgage payment is made to your lender each month to meet the conditions of your mortgage contract. A mortgage payment can include:
Principal. The principal is the original amount you borrow. If you’re buying a $400,000 home and your down payment is $50,000, the principal is $350,000.
Interest. In exchange for letting you borrow money, lenders charge interest. Mortgage interest rates are a major factor in any long-term mortgage.
Mortgage default insurance. If your down payment is less than 20% of the home’s purchase price, you’ll be required to buy mortgage default insurance. Your mortgage default premium will be added to your principal, which means you’ll pay interest on it.
Property taxes. Some lenders allow you to include your property taxes in your mortgage payment.
Mortgage payment factors
It’s important to understand the elements that determine a mortgage payment. Doing so can help you adjust your approach if the payment amount is too high for you to afford.
Down payment
The size of your down payment will determine how much money you borrow from a lender. The larger your down payment, the smaller your mortgage principal. A down payment of 20% or more will also help you avoid purchasing mortgage default insurance.
While it might seem ideal to put down the largest amount possible, doing so could restrict the amount of money you have available to cover closing costs and any maintenance expenses you encounter.
You can learn about Canada’s minimum down payment requirements below.
Purchase price | Minimum down payment required |
|---|---|
Minimum down payment required | 5% of the purchase price |
$500,000 to $999,999 | 5% of the purchase price for the first $500,000; 10% for the portion above $500,000 |
$1 million or more | 20% of the purchase price |
Mortgage term vs amortization period
Your mortgage term is how long your current mortgage contract lasts. Once your term expires, you’ll have to renew your mortgage or pay it off in full. Some mortgage terms are only six months, some are 10 years.
In certain economic climates, there might be a significant difference between the rates attached to three- and five-year fixed terms, or between three-year fixed terms and five-year variable terms. In these cases, the term you choose can affect the size of your mortgage payment in a big way.
The amortization period is how long it will take to pay down your mortgage in full. If you have a down payment worth less than 20% of a home’s sale price, the longest amortization period you can choose is 25 years.
Choosing a longer amortization period will lower your monthly mortgage payment, but it will also mean paying interest to your lender for a longer period of time.
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Nerdy TipUse a mortgage amortization calculator to see the effects different amortization periods have on your monthly mortgage payment and the overall cost of your mortgage.
Rate type
The type of interest you choose for your home loan — fixed-rate or variable-rate — can have a serious impact on your mortgage payment.
A fixed interest rate means your interest rate will stay the same for the duration of your mortgage term. If you get a five-year, fixed-rate mortgage at 5%, for example, you’ll have the same interest rate for the full five years, unless you refinance your loan mid-term.
With a variable-rate mortgage, your interest rate will rise and fall in response to changes in your lender’s prime rate. As the prime rate rises, so does your interest rate. When that happens, more of your mortgage payment will go toward interest and less will go toward the principal.
Choosing between fixed and variable mortgage rates can be challenging. There’s less risk with fixed rates, but under normal financial conditions, variable rates tend to be lower. Always consult a mortgage professional when making a decision on rate type.
Payment frequency
Mortgage payments don’t have to be made once a month. You can also choose:
Semi-monthly payments: Two payments per month.
Bi-weekly payments: One payment every two weeks regardless of month.
Accelerated bi-weekly payments: The same payment amount as with semi-weekly payments, but made every second week so you’ll make two extra payments a year.
The cheapest option is generally bi-weekly, which stretches your annual payment amount across 26 payments instead of 24. The easiest option might be monthly, which requires only a single payment each month.
More mortgage calculators to inform your home buying decision
4 tips for reducing your monthly mortgage payment
1. Compare mortgage rates between lenders
By shopping around and comparing rates, you may be able to get a mortgage that charges a lower interest rate.
A good way to begin comparison shopping is with a Google search. Try typing in any of the following terms to get started:
When comparing mortgage offers, try to be thorough. Don’t stop at the rate. Look at prepayment privileges, missed payment options and portability, too. If making these comparisons feels confusing, stressful or boring, consider enlisting the services of a mortgage broker.
2. Make a bigger down payment
A larger down payment reduces the amount of money you need to borrow. You’ll pay less interest on your mortgage, and you may be able to arrange a shorter amortization period or smaller monthly payments.
Making a bigger down payment can also help you secure a better interest rate on your mortgage. You’ll have more equity in your home straight away, which makes you less of a risk in the eyes of lenders.
3. Choose a longer amortization period
Choosing a longer amortization period spreads your mortgage out over a longer time frame, which results in smaller monthly payments.
Extending your amortization means paying more in interest overall, but the extra breathing room every month can be a game-changer if you’re a homeowner on a tight budget.
4. Refinance
If mortgage rates fall significantly during your mortgage term, refinancing your mortgage can also help reduce your monthly mortgage payments.
When you refinance, you essentially begin a new mortgage. This gives you an opportunity to adjust your amortization period and payment schedule, both of which can help lower your monthly payments.
Frequently asked questions
How can I calculate a mortgage payment?
How can I calculate a mortgage payment?
To illustrate how to calculate a mortgage payment on your own, we’ll use an example mortgage for a home worth $700,000. We’ll assume a down payment of 20% ($140,000), a 5% interest rate and a 25-year amortization period. We’ll also use a monthly payment frequency.
1. Principal
The first thing to do is establish the principal. This can be done by subtracting your down payment from the home’s sale price.
$700,000 – $140,000 = $560,000
2. Total payments
You’ll also need to know the total number of mortgage payments you’ll be making. Calculate this number by multiplying the total years of your amortization by 12, the number of months in each year.
25 x 12 = 300
3. Monthly interest rate
Here’s where things get a little more complicated. Interest is an annual calculation, so you have to break down your interest rate to find out how much interest you’ll pay each month. Our formula does this in two steps.
First, you need to find out your effective annual interest rate (EAR). You do this using your actual rate (R) and the number of times interest compounds per year (C).
EAR = ((1 + (R/C)) ^ C) – 1
((1 + (.05/2)) ^ 2) – 1 = 0.05062
Then you have to determine your monthly interest rate (R). You’ll need to plug your number of payments per year (N) into this one.
R = (((1 + EAR) ^ (1/N)) -1)
(((1+ 0.05062) ^ (1/12))-1 = .00412
4. Final calculation
You have all the numbers you need. It’s time to plug them into the formula for determining your monthly mortgage payment (P).
P = Principal x monthly interest rate/ 1 – (1 + monthly interest rate) ^ (-total number of payments)
560,000 x 0.00412 / 1 – (1 + 0.00412) ^ (-300)
Monthly payment = $3,257
How much is the mortgage payment on a $300,000 house?
How much is the mortgage payment on a $300,000 house?
Estimating mortgage payments based on a home’s price is difficult without knowing more about your finances.
Let’s say you have pristine credit, a $50,000 down payment and are offered a mortgage interest rate of 5%. A $300,000 house would cost you $1,495 a month. But if your credit score is low, you only have the minimum down payment of $15,000, and the best rate you’re offered is 6.25%, your monthly payment would be $1,941.
How much is the monthly payment on a $500,000 mortgage?
How much is the monthly payment on a $500,000 mortgage?
The monthly payment on a $500,000 mortgage depends on the interest rate and the amortization period. At 5% and a 25-year amortization, your monthly payment would be $2,989. At 4% and 25 years, it would be $2,704. A 5% rate and a 20-year amortization would result in a monthly payment of $3,378.
Are closing costs part of a mortgage payment?
Are closing costs part of a mortgage payment?
A mortgage payment typically includes the principal, interest and mortgage default insurance. Closing costs like commissions, land transfer taxes and legal fees will need to be paid separately.
What if I can’t afford my mortgage payment?
What if I can’t afford my mortgage payment?
If you’re having difficulty making your mortgage payment each month, reach out to your lender or mortgage broker and find out what options are available to you — ideally before you miss a mortgage payment. Lenders often help their borrowers in instances like these, so there may be a solution that works for you, like extending your amortization or switching your mortgage from a variable rate to a fixed rate.
DIVE EVEN DEEPER
Kurt Woock
Clay Jarvis
Clay Jarvis