Mortgage calculator
Mortgage payments using the semi-annual compounding convention required in Canada.
Monthly repayment
$3,133.40
41% of everything you repay is interest
- Total interest
- $390,018
- Total repaid
- $940,018
- Paid off in
- 25 years
| Amount borrowed | $550,000 |
|---|---|
| Interest | $390,018 |
| Total repaid | $940,018 |
A 4.79% rate compounded semi-annually gives a monthly periodic rate of about 0.3946%, not the 0.3992% that dividing by 12 produces.
Over the life of it
How this is calculated
Compounding frequency changes the payment
Canadian fixed-rate mortgages compound semi-annually by statute, so the monthly rate is the sixth root of the half-yearly rate. At 4.79% that is 0.3946% rather than 0.3992%.
monthly rate = (1 + annual ÷ 2)^(1/6) − 1Small rate differences compound
The gap between 0.3946% and 0.3992% a month looks negligible but runs for 300 payments. On $550,000 over 25 years it is worth several thousand dollars.
A fixed term is not the full loan
In Canada the rate is typically fixed for 5 years while the loan amortises over 25, so the rate resets four times before the mortgage clears.
Worked example: $550,000 at 4.79% over 25 years
| Mortgage | $550,000 |
|---|---|
| Rate | 4.79% |
| Monthly periodic rate | 0.3946% |
|---|---|
| Payments | 300 |
Compounding conventions differ by country. Pick a country above for the one your lender is required to use.
What this assumes
- A fixed rate for the full period.
- Semi-annual compounding.
- No insurance premium added to the balance.
- No property tax or fees included.
Where this commonly goes wrong
- Where a rate is fixed for a shorter term than the amortisation, the payment shown applies only until renewal.
- Default insurance on a low deposit is usually added to the balance, so interest is charged on the premium too.
- Breaking a fixed-rate mortgage early commonly triggers a penalty based on the rate movement, not a flat fee.
Questions
What is semi-annual compounding?
Interest compounded twice a year rather than monthly. Canadian law requires it on fixed-rate mortgages, making the monthly rate the sixth root of the half-yearly rate — 0.3946% from a 4.79% quote.
Does the compounding convention change my payment?
Yes, slightly per payment and materially over the loan. On $550,000 over 25 years the difference between the correct rate and a naive divide-by-12 is worth several thousand dollars of interest.
Is the rate fixed for the whole mortgage?
In Canada, usually not. A 5-year term inside a 25-year amortisation means four renewals at unknown future rates, which is a different risk profile from a fully fixed long-term loan.
How do bi-weekly payments shorten a mortgage?
Accelerated bi-weekly means half the monthly payment every two weeks, which is 26 payments a year rather than 24 — one extra monthly payment annually. On a 25-year amortisation that typically removes around three years and tens of thousands of interest.
What happens if I need to break the mortgage early?
A fixed-rate mortgage broken before the term ends usually triggers the greater of three months of interest and an interest rate differential. On a large balance with a big rate movement that penalty can run into tens of thousands of dollars.
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Sources
This calculator does arithmetic on the figures you enter. It does not account for tax, fees, or your personal circumstances.
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