Canadian Mortgage Calculator
$0.00 / payment
| Year | Principal Paid | Interest Paid | Ending Balance |
|---|
Why Canadian Mortgages Compound Differently Than U.S. Mortgages
By federal law, Canadian fixed-rate mortgages must compound semi-annually, not monthly. That means the rate you're quoted (say, 5.25%) is a nominal annual rate compounded twice a year, not twelve times. To get the true monthly rate for payment calculations, this calculator first finds the semi-annual periodic rate (annualRate / 2), then converts it to an equivalent effective monthly rate using (1 + annualRate/2)^(1/6) - 1. This produces a slightly lower monthly rate than simply dividing the annual rate by 12, which is how most U.S. calculators (including our own mortgage calculator) handle it. Skipping this conversion is the most common reason online Canadian mortgage estimates come out wrong.
Term vs. Amortization: Two Different Clocks
Canadian mortgages separate the amortization period (the total time, often 25 or 30 years, over which the loan is scheduled to be paid off) from the term (typically 1 to 10 years, after which you must renew at whatever rate is available). This calculator shows both the full amortization schedule and the balance still owing when your current term ends — the number you'll actually be renewing or renegotiating against. A shorter term with a lower rate can look attractive, but it also means facing rate uncertainty sooner.
CMHC Insurance and the 20% Rule
If your down payment is less than 20% of the home price, Canadian lenders require mortgage default insurance, most commonly through CMHC. This calculator applies a simplified premium schedule based on your loan-to-value ratio and adds it directly to your mortgage principal, which is how it's typically financed in practice. If you're still deciding how much to put down, the down payment calculator and house affordability calculator can help you weigh a larger down payment against your other financial goals.
Frequently Asked Questions
Why is my payment different from a US mortgage calculator using the same rate?
Canadian mortgages are legally compounded semi-annually, while US mortgages compound monthly. A 5.25% Canadian rate produces a slightly lower effective monthly rate than simply dividing 5.25% by 12, so payments calculated the Canadian way will usually come out marginally lower than a US-style calculator using the same nominal rate.
What is the difference between the mortgage term and the amortization period?
The amortization period (often 25 or 30 years) is the total time scheduled to pay off the loan, while the term (commonly 1 to 5 years) is how long your current interest rate and lender agreement lasts before you must renew. This calculator shows the balance still owing at the end of your chosen term, which is the amount you'll be renewing against, possibly at a different rate.