How the mortgage payment calculator works

The live tool stays on the payment calculator. This page is the formula, worked example, and frequency tables.

The formula, spelled out

Canadian fixed-rate mortgages compound twice a year. Converting a quoted annual rate into the periodic rate that actually drives the payment therefore takes a root, not a division. For a monthly payment:

i = (1 + r / 2) ^1/6− 1

At a quoted 4.29%, that gives a monthly periodic rate of 0.354346%. Dividing 4.29 by 12 would give 0.357500% — higher, and wrong for a Canadian fixed mortgage. Every payment on this page uses the semi-annual conversion, so the figures line up with what a lender’s own system will produce rather than with a generic amortization table.

The payment itself is the standard annuity formula, with P the principal, i the periodic rate from above, and n the total number of payments over the full amortization:

PMT = P × i × (1 + i)ⁿ ÷ ((1 + i)ⁿ− 1)

Note that n spans the amortization, not the term. A five-year term on a 25-year amortization is priced over 300 payments; the term simply determines when the rate is re-set.

Worked example: $650,000 with 20% down

A buyer purchases at $650,000 with $130,000 down, leaving a $520,000 uninsured mortgage at 4.29% amortized over 25 years and paid monthly.

Monthly payment

$2,817.67

principal and interest

First payment split

$975 / $1,843

principal / interest

Interest over 25 years

$325,300

at a constant 4.29%

Over a five-year term the borrower pays $169,060 in total, of which $65,060 reduces the principal and $103,999 is interest. The balance at the end of the term is $454,940 — the number that becomes the starting point for a renewal. Roughly 62% of the money paid in the first five years is interest, which is why prepayment privileges are worth far more early in the amortization than late.

What each payment frequency costs

Same $520,000 mortgage, same 4.29%, same 25-year amortization. The only thing that changes is how often you pay.

Frequency	Per payment	Per year	Payoff	Total paid
Monthly	$2,817.67	$33,812	25.0 yrs	$845,300
Semi-monthly	$1,407.59	$33,782	25.0 yrs	$844,552
Bi-weekly	$1,299.22	$33,780	25.0 yrs	$844,495
Accelerated bi-weekly	$1,408.83	$36,630	21.8 yrs	$797,368
Weekly	$649.35	$33,766	25.0 yrs	$844,150
Accelerated weekly	$704.42	$36,630	21.8 yrs	$796,833

The four non-accelerated rows are nearly identical: paying more often saves a few hundred dollars over 25 years, because interest accrues on a slightly lower average balance. The two accelerated rows are a different instrument entirely. They cost $2,818 more a year — exactly one extra monthly payment — and return roughly $47,900 in interest and three years and three months of payments. If you can carry the extra 8.3%, it is usually the highest-return change available on a mortgage you already have.

Amortization length

Amortization	Monthly payment	Total interest	Availability
25 years	$2,817.67	$325,300	Standard on insured and uninsured
30 years	$2,558.74	$401,147	Uninsured generally; insured only for first-time buyers and new builds

Five extra years lowers the payment by $258.93 and adds $75,847 in interest. Stated as a rate of exchange, each dollar of monthly relief costs about $293 over the life of the loan.

Deeper payment questions

What are prepayment privileges and how much are they worth?▾

Most closed Canadian mortgages let you put a lump sum against the principal each year — commonly 10% to 20% of the original balance — and increase your regular payment by a similar percentage. Both go straight to principal, so both shorten the amortization. The privileges are contractual and vary meaningfully between lenders, which makes them worth comparing alongside the rate. Exceeding them triggers a prepayment charge calculated the same way as breaking the term.

What closing costs should I budget on top of the down payment?▾

Land transfer tax is usually the largest single item and varies enormously by province and city. Beyond it, budget legal fees and disbursements of roughly $1,000 to $1,500, title insurance of a few hundred dollars, an appraisal of about $300 where the lender requires one, and a home inspection. If your mortgage is insured, the provincial sales tax on the insurance premium is also payable in cash at closing in Ontario, Quebec and Saskatchewan.