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Canadian mortgage calculator

Payments on a Canadian mortgage using semi-annual compounding, the convention the Interest Act requires and most calculators quietly ignore.

$
%

As quoted — compounded semi-annually.

25 years

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
Balance owing: $550,000Balance owing: $538,231Balance owing: $525,892Balance owing: $512,955Balance owing: $499,391Balance owing: $485,169Balance owing: $470,258Balance owing: $454,624Balance owing: $438,232Balance owing: $421,046Balance owing: $403,027Balance owing: $384,134Balance owing: $364,325Balance owing: $343,556Balance owing: $321,781Balance owing: $298,949Balance owing: $275,012Balance owing: $249,913Balance owing: $223,598Balance owing: $196,008Balance owing: $167,080Balance owing: $136,750Balance owing: $104,950Balance owing: $71,608Balance owing: $36,650
Principal and interest by year
Breakdown of Monthly repayment
Amount borrowed$550,000
Interest$390,018
Total repaid$940,018

A 4.79% Canadian rate compounds semi-annually, giving a monthly periodic rate of about 0.3946% rather than the 0.3992% a simple divide-by-12 would produce.

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Over the life of it

How this is calculated

Semi-annual compounding is the law, not a preference

Section 6 of the Interest Act requires fixed-rate mortgages to state interest compounded no more than semi-annually. The monthly rate is therefore the sixth root of the half-yearly rate, not the annual rate over twelve.

monthly rate = (1 + annual ÷ 2)^(1/6) − 1

The difference is small per month and large per mortgage

At 4.79% the correct monthly rate is 0.3946% against 0.3992% from a naive divide. On $550,000 over 25 years that gap is worth several thousand dollars of interest — small enough to look like rounding, large enough to matter.

Term and amortisation are different things

The amortisation period is how long the loan takes to clear — commonly 25 years. The term is how long your rate is fixed, usually 5. At the end of each term you renew at whatever rates then apply, which is the main risk Canadian borrowers carry.

Worked example: $550,000 at 4.79% over 25 years
Inputs
Mortgage$550,000
Rate4.79%
Amortisation25 years
Result
Monthly periodic rate0.3946%
Payments300
ConventionSemi-annual

Switching to accelerated bi-weekly payments — half the monthly amount every two weeks — makes 26 payments a year instead of 24 and typically removes about three years from the amortisation.

What this assumes
  • A fixed rate held for the full amortisation period.
  • Semi-annual compounding as required by the Interest Act.
  • No mortgage default insurance premium added.
  • No property tax or condo fees included.
Where this commonly goes wrong
  • Rates renew at the end of each term, usually 5 years, so a 25-year amortisation carries four renewals at unknown rates — the payment shown here is not fixed for the life of the loan.
  • Mortgage default insurance is required below a 20% down payment and is added to the balance, so you pay interest on the premium for the whole amortisation.
  • Breaking a fixed mortgage early triggers the greater of three months of interest and an interest rate differential, which can run into tens of thousands.

Questions

Why is the Canadian mortgage calculation different?

Section 6 of the Interest Act requires fixed-rate mortgages to compound no more than semi-annually. The monthly rate is the sixth root of the half-yearly rate, so 4.79% gives 0.3946% a month rather than 0.3992%.

What is the difference between term and amortisation?

Amortisation is how long the loan takes to repay, typically 25 years. Term is how long your rate is locked, usually 5. You renew at prevailing rates at the end of each term, so the payment is not fixed for the whole loan.

What are accelerated bi-weekly payments?

Half the monthly payment every two weeks, which makes 26 payments a year instead of 24 — the equivalent of one extra monthly payment. On a 25-year amortisation that typically removes about three years.

Do I need mortgage default insurance?

Below a 20% down payment, yes. The premium is added to your mortgage balance rather than paid upfront, so you pay interest on it across the full amortisation as well as the premium itself.

What is the maximum amortisation in Canada?

25 years for an insured mortgage, or up to 30 with a 20% down payment and for some first-time buyers of new builds. Longer amortisation lowers the payment and materially raises total interest.

What happens when my term ends?

You renew at whatever rates apply then, with your lender or another. That renewal risk is the main difference from a US-style 30-year fixed, where the rate is locked for the entire loan.

Related tools

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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