See what your estimated monthly mortgage payment will be based on the purchase of a home in Canada.
What are Typical Costs Included in a Mortgage
Your mortgage payment will work to pay down the outstanding mortgage loan you have on your home. Part of this payment will go towards the interest that the lender charges while the other portion will go to pay down the principal. Here are some costs that are included in the typical mortgage payment:
- Principal: This is the original amount of the loan that you borrow to purchase your home. This is the balance that get paid back over the course of the amortization period.
- Interest: The lender will charge interest on the amount of the loan outstanding. Since there is a larger principal balance outstanding initially, your first payments will be more interest heavy with little principal being paid back. Towards the end of your amortization period more principal will be paid back with each payment.
- Mortgage default insurnace (CMHC Insurance): If you are required to purchase mortgage default insurance, you can add the premium onto your principal, which will include this amount in your mortgage payment to be paid back over the life of the mortgage.
How can you Calculate your Monthly Mortgage Payment?
This calculator helps you calculate your monthly mortgage payment and understand how each input impacts your mortgage payment. This calculator takes the purchase price of your home and uses your down payment to see the principal of the loan that you will be required to have. In doing so it will also make sure that you are aware of the minimum down payment you must make.
One of the main factors that impact how much your payment will be is the mortgage rate. In Canada the mortgage rate is usually locked in for a 5-year term and you will be required to get another interest rate multiple times over the amortization period of your mortgage. The two common mortgage rate types are variable rate mortgages and fixed rate mortgages.
It is important to know that a fixed mortgage rate will also change the mortgage calculation as interest is only compounded semi-anually when a fixed mortgage rate is used. This is why it is important to use a Canadian mortgage payment calculator to ensure that you have an accurate estimate for your payment.