# Impressive Mortgage Calculator for Canada

Feb 16, 2020

## Understanding Mortgage Calculator for Canada

Are you planning to buy a property ?? Then it is essential to know how much you will need to pay for your mortgage on a monthly basis. The Mortgage Calculator for Canada ? helps you know your monthly repayments on a property, the total interest you will pay and the total repayment amount.

To calculate your monthly repayment you will need to input the purchase price, down payment, interest rate and amortization period.

### Purchase Price ?

This is the asking price of the home you intend to buy. The higher the asking price the higher your monthly repayments are likely to be.

It is paramount to understand that most property sells for less than the asking price so you should try to negotiate the price down as much as you can.

### Down Payment ?

The down payment is the amount needed to secure the property you intend to buy.

At times banks grant 100% home loans, it is, however, a rare occurrence, more often than not you will need at least 5% of the asking price as a down payment.

Paying a larger down payment will significantly reduce your monthly repayments.

### Interest Rate ?

This is the rate at which the bank lends you the money to buy the property you intend to buy.

The rate which the bank charges you is based on a variety of factors. It has often proved to be a smart move to negotiate a lower rate.

A small reduction in the interest rate can amount to a large sum over the course of the mortgage.

### Amortization Period ?

The amortization period is how long you choose to repay the bank for the property. Most new home loans are over 20 years but you can choose a shorter or longer term.

By choosing to pay off your mortgage over a shorter term you will pay less interest and save a significant amount of money.

If you select a longer-term, your monthly repayments will be lower but you will pay more in interest over the duration of the home loan.

#### What formulae mortgage calculator for Canada uses?

Are you a math fan. The mortgage payment calculation looks like this: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]

#### The variables are as follows:

M = monthly mortgage payment
P = the purchase price
i = your monthly interest rate. Your lender likely lists interest rates as an annual figure, so you’ll need to divide by 12, for each month of the year. So, if your rate is 5%, then the monthly rate will look like this: 0.05/12 = 0.004167.
n = the number of payments over the life of the loan. If you take out a 30-year fixed-rate mortgage, this means n = 30 years x 12 months per year, or 360 payments.

#### Which Province did you use Mortgage calculator for Canada to Calculate? Here are some interesting facts about Mortgages in the country and in each province:

According to a government study:

• 63% of Canadian families own their homes
• 43% of Canadian homeowners had paid off the mortgage on their principal residence
• Mortgage debt represented two-thirds of the overall increase in debt for Canadian families, while consumer debt made up the remainder
• The median amount of mortgage debt among Canadian families with a mortgage almost doubled, from \$91,900 to \$180,000 in 2016 constant dollars
• Almost three-quarters (74%) of Canadian families with a mortgage had a fixed mortgage rate, 21% had a variable mortgage rate, and 5% had a combination of a fixed and variable mortgage rate
###### Homeownership City Variances

This high level of homeownership should not come as a surprise. Canada has one of the highest homeownership levels in the developed world.

However, as you would notice in the above table, Big cities like Toronto and Vancouver have a low ownership percentage as compared to smaller cities.

This is largely a result of high housing prices. Therefore many resorts to getting reasonable mortgages in the smaller cities, leaving ownership in big cities to large real estate companies.

###### Homeownership Age Variances ?

There is a clear association between homeownership and age, largely because homeownership is a life cycle phenomenon.

Younger individuals aged less than 35 are less likely to own homes because many are still in school and others have recently graduated and are in the process of saving money for a down payment.

The homeownership rate is higher among middle-aged individuals (i.e., those aged 45 to 64); in 2016, homeownership was 71% among families whose major income earner was aged 45 to 54 and 78% among those aged 55 to 64.

*Disclaimer: Please note that by default this calculator uses the prime interest rate for mortgage payment calculations. This is purely for convenience and not an indication of the interest rate that might be offered to you by a bank. Therefore, this mortgage calculator for Canada is intended to provide estimates based on the indicated amounts, rates and fees. Whilst we make every effort to ensure the accuracy of these calculations, we cannot be held liable for inaccuracies. Alberta 365 does not accept liability for any damages arising from the use of this calculator.

#### By Shephard Dube

Shephard Dube is a lover of writing. Ranging from educational to informational to fictional writing. He writes on various topics, including but not limited to finance, politics, economics, self-help and law.