How this Mortgage Payments Calculator Works
This calculator estimates your mortgage payment for both a new purchase / mortgage and an existing mortgage. In new-purchase mode, it uses your home price, down payment, interest rate, amortization period, and payment frequency (monthly, biweekly, or weekly). In existing-mortgage mode, you can recalculate from your current balance and remaining amortization (years + months). It is designed for Canadian scenarios, and can optionally include CMHC-style mortgage insurance and annual taxes & costs.
What the payment includes
- Principal: the portion of each payment that reduces the amount you borrowed.
- Interest: the cost of borrowing, calculated on your remaining mortgage balance.
Down payment and loan amount
Your loan amount is the purchase price minus your down payment. Increasing the down payment usually lowers the loan amount, reduces the interest you pay over time, and can also change whether mortgage insurance applies.
CMHC (mortgage insurance) toggle
If your down payment is below 20%, many lenders require mortgage default insurance. When you enable Include CMHC (mortgage insurance), the calculator estimates the insurance premium and adds it to the loan amount (as is commonly done for insured mortgages). This increases the balance being amortized, which increases the payment.
Including annual taxes and costs
If you enable Include annual taxes and costs, you can enter yearly totals for:
- Property taxes
- Home insurance
- Condominium fees (if applicable)
- Other recurring costs
The calculator spreads these annual amounts across your chosen payment frequency and shows an estimated payment including those costs. This helps you compare the 'mortgage-only' payment vs. a more realistic all-in estimate.
Existing mortgage mode: recalculate your current loan
If you already have a mortgage, use Existing mortgage mode to estimate payments from where you are today instead of starting from the original purchase price.
- Enter your remaining mortgage balance.
- Enter your remaining amortization in years and months for better precision.
- Test payment increases and/or lump-sum prepayments to compare outcomes.
The calculator can compare a standard path versus your strategy, including estimated interest savings and time saved when extra payments are applied. This is useful for mortgage renewal planning, refinancing analysis, and payoff acceleration scenarios.
Payment frequency: monthly vs. biweekly vs. weekly
More frequent payments reduce your balance sooner across the year, which can lower total interest over time. The amortization table shows how each period's payment is split between principal and interest, and how the remaining balance declines.
Fixed vs. variable mortgage rates (and why payments change)
When comparing mortgage rates in Canada, you'll usually see two main options: fixed-rate mortgages and variable-rate mortgages. Understanding the difference helps you interpret this mortgage payment estimate and plan your budget.
1. Fixed-rate mortgage
With a fixed interest rate, your rate stays the same for your chosen term (for example, 3 years or 5 years). In most cases, your payment amount stays the same throughout the term (unless you make a change like refinancing, increasing your payment, or changing your payment frequency). Fixed rates are often chosen for payment stability and easier budgeting.
2. Variable-rate mortgage
With a variable interest rate, your rate can move up or down during the term. In Canada, variable rates are commonly priced off the lender's prime rate, which tends to move in response to the Bank of Canada's policy (overnight) rate (often called the 'key rate' or 'taux directeur'). When the policy rate rises, prime rates typically rise; when it falls, prime rates typically fall.
Important: Variable mortgages can behave in two common ways: (1) Adjustable payment (your payment changes when rates change), or (2) Fixed payment variable (your payment stays the same, but the split between interest and principal changes, and your amortization can lengthen when rates rise). Different lenders use different mechanics.
Prime rate, policy rate, and why your mortgage rate follows them
The Bank of Canada sets the policy (overnight) rate to influence borrowing costs in the economy. Banks and lenders then set their prime rate, which is a benchmark used for many variable-rate products. A typical variable mortgage rate is quoted as Prime +/- X%. For example, 'Prime - 0.80%' means your mortgage rate equals the current prime rate minus 0.80%.
This is why news about interest-rate decisions can affect variable mortgage payments, interest costs, and sometimes even your effective amortization.
Mortgage term vs. amortization
Many people confuse mortgage term and amortization, but they're different:
- Amortization is the total time to pay off the mortgage (commonly 25 or 30 years).
- Term is how long your current rate and contract conditions last (commonly 1 to 5 years, sometimes longer).
This mortgage payments calculator uses your amortization to estimate the payment today. At the end of each term, you usually renew or renegotiate your mortgage rate and term. If rates are higher at renewal, your payment may increase; if rates are lower, your payment may decrease (depending on your new rate, remaining balance, and remaining amortization).
Renewal and renegotiation at the end of the term
At the end of your term, lenders will offer a renewal. You can often accept their offer, negotiate a better rate, or switch lenders. Your renewal options can include:
- Choosing a new term length (e.g., 3-year fixed vs. 5-year fixed).
- Switching between fixed and variable.
- Changing payment frequency or making a lump-sum payment (if your contract allows it).
Pro tip: when shopping, compare 'mortgage renewal rates' and ask about fees for switching lenders.
Refinancing vs. renewing
Refinancing means replacing your existing mortgage with a new one -often to access equity (cash-out refinance), consolidate debt, or change your mortgage structure. Refinancing can happen at renewal or mid-term, but it may trigger fees.
- Renewal: continuing the mortgage (usually with the same balance) into a new term.
- Refinance: changing the loan amount and/or contract (may require re-qualification and legal work).
Because refinancing can change your balance, rate, and amortization, it can significantly change your estimated mortgage payment.
Breaking a mortgage: penalties and fees (what it can cost)
If you break your mortgage (pay it out early or switch lenders before the term ends), lenders may charge a prepayment penalty. The penalty depends on whether your mortgage is fixed or variable and on your lender's rules.
Common penalty types
- Variable-rate mortgages: often around three months' interest (but confirm your contract).
- Fixed-rate mortgages: often the greater of three months' interest or an Interest Rate Differential (IRD). IRD can be significant if current rates are lower than your contract rate.
Other costs can include discharge fees, legal fees, appraisal fees, and in some cases a reinvestment or admin fee. Before breaking a mortgage, ask your lender for a written penalty quote and compare the savings from switching vs. the total cost.