ExamPassCanadian Mortgage Payment Calculator
Canadian fixed-rate mortgages compound interest semi-annually, not monthly, so a Canadian payment is a little lower than a US calculator shows at the same rate. Convert the annual rate to an effective rate for each payment period, then apply the standard payment formula. Enter the mortgage, the rate and the amortization below to see the payment at every frequency, the formula with your numbers in it, and the balance at the end of your term.
Enter the mortgage, rate and amortization to see the payment at every frequency and the formula.
What formula does the calculator use?
With an annual rate j compounded twice a year and n payments a year, the effective rate for each payment is:
i = (1 + j/2)^(2/n) − 1
Payment = P × i / (1 − (1 + i)^−N)
P is the amount borrowed and N is the number of payments over the amortization (n × years). For monthly payments, n is 12; semi-monthly 24; bi-weekly 26; weekly 52.
Lenders publish the same result as a payment factor: the payment per $1,000 borrowed. The calculator shows the factor to six decimals, so you can check it against a factor table the way the course teaches: payment = (loan ÷ 1,000) × factor.
Accelerated payments. Most lenders define an accelerated bi-weekly payment as half the monthly payment, paid 26 times a year, and an accelerated weekly payment as a quarter of it, paid 52 times. That adds about one extra monthly payment a year and shortens the amortization. Confirm your lender's definition.
Worked example: a 25-year mortgage in Ottawa
Marc borrows $520,000 at 4.79%, compounded semi-annually, over 25 years.
| Step | Working | Result |
|---|---|---|
| Effective monthly rate | (1 + 0.0479 ÷ 2)^(2 ÷ 12) − 1 | 0.395241% |
| Number of payments | 12 × 25 | 300 |
| Monthly payment | 520,000 × i ÷ (1 − (1 + i)^−300) | $2,962.48 |
| Payment factor | per $1,000 | 5.697084 |
| Bi-weekly payment | 26 a year | $1,365.85 |
| Accelerated bi-weekly | $2,962.48 ÷ 2 | $1,481.24 |
| Balance after a 5-year term | 60 monthly payments | $458,705.75 |
The effective annual rate is 4.847360%, a little above the 4.79% quoted, because interest compounds twice a year.
Frequently asked questions
Why is a Canadian mortgage compounded semi-annually?
Fixed-rate mortgage rates in Canada are usually quoted as compounded semi-annually, and the payment factors taught in the course are built that way. Some variable-rate products compound monthly; the calculator has a monthly compounding option for those. Your mortgage commitment states how your rate compounds.
What is the difference between the term and the amortization?
The amortization is how long it would take to pay off the whole loan. The term is how long the rate and lender are fixed, often five years. At the end of the term the balance is renewed or paid off, which is why the calculator shows the balance at the end of the term.
Do I need to know this formula for the real estate exam?
Course 2 expects you to calculate a payment from a payment factor and to know how frequency and amortization change the payment and the interest. The formula lets you see where the factor comes from. The GDS and TDS calculator then shows whether a buyer can carry the payment.