Mortgage Calculator Canada

A Canadian fixed mortgage rate is quoted as a nominal rate compounded twice a year. A 5.00% fixed rate does not add 5.00% divided by 12 each month. It adds 2.50% every six months, and the monthly rate is derived from that six month growth. This convention comes from the Interest Act, which requires mortgage interest to be expressed on a basis that can be stated as an annual rate with compounding no more frequent than semi-annual unless the contract clearly states otherwise. Lenders, brokers and the courts have worked on that semi-annual basis for fixed rates ever since, so every fixed-rate quote you compare in Canada sits on the same footing.

The practical effect is that a Canadian fixed rate is slightly cheaper than the same number compounded monthly. Interest that compounds twice a year grows more slowly than interest that compounds twelve times a year, because interest starts earning interest less often. Variable rates are the exception readers most often meet: most Canadian variable-rate mortgages compound monthly, which is why this calculator lets you switch the convention. Always match the compounding basis to the quote in front of you. Comparing a fixed j2 quote against a variable monthly quote without converting both to payments is how borrowers talk themselves into the wrong product.

Once the compounding basis is set, the payment follows the standard amortization formula, just with a periodic rate that matches your payment frequency. The calculator converts the quoted rate to your chosen period, builds the full schedule period by period, and reports the payment per period alongside its monthly equivalent so schedules remain easy to compare.

All four rows below repay the same hypothetical $500,000 loan at 5.00% j2 over 25 years. Regular schedules are sized to finish exactly at 25 years. Read the monthly equivalent column to compare cash flow, and the total interest column to compare cost.

Splitting the same amortization into more payments saves a little interest, because principal comes down a few days sooner each cycle. The saving from monthly to weekly in this example is about $1,380 over 25 years. That is real, but small.

Accelerated bi-weekly is a different product. Instead of the regular bi-weekly amount, you pay half the monthly payment, $1,454.01 in this example, every two weeks. Twenty-six half payments equal thirteen monthly payments a year, so one full extra monthly payment lands on principal annually. Run that schedule on the worked example loan and it ends in about 21.5 years (559 bi-weekly payments) with about $311,972 in interest, roughly $60,435 less than the monthly schedule. The saving comes from paying more each year, not from the two week timing. If cash flow allows it, accelerated payments are one of the simplest term shortcuts a borrower controls directly. Confirm the accelerated amount and any prepayment limits with your lender before you rely on them.

Every rate in this section is hypothetical. Run the calculator above with your own quoted rate and amortization to get figures for your loan.

Enter the price and down payment to set the mortgage amount, then enter the rate exactly as quoted and pick the compounding that matches that quote: semi-annual for a typical fixed rate, monthly for a typical variable rate. Choose your payment frequency and amortization, then read the payment per period together with the monthly equivalent. Two offers can only be compared fairly on the same basis, so convert both to monthly equivalents and total interest before you judge either one.

Remember what this view leaves out. Principal and interest is only part of carrying a home. Property tax, insurance, heating and condo fees decide whether the home fits your budget and whether you pass lender affordability tests. Once you have a payment you like here, carry the same price, down payment and rate into the Canada affordability calculator, which applies the stress test and the GDS and TDS limits. If you are comparing against a US-style quote, use the general mortgage calculator as well, and compare payments rather than quoted percentages.