Canadian Mortgage

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Canadian Mortgage Calculator 

Some people have sufficient amounts of money to purchase houses without needing to take a mortgage, but for others, they will rely on mortgage to finance the house buying deals. A mortgage is a loan that is taken to help buy a home. Individuals taking out mortgages will make down payments and the remaining balance of the loan is paid through monthly installments. The length of paying for mortgage also known as the amortization period can vary depending on the kind of loan you are taking but most have an amortization schedule of about 25 years. To calculate the amount of mortgage you should take, the home buyer may need to use a mortgage calculator.

A Canadian mortgage calculator helps you to find out the monthly mortgage repayments you will be making. The mortgage calculator also helps you know the total payment and the interest you will pay. This way, you can make an informed decision on whether you are financially fit to be able to repay the mortgage or not. A mortgage calculator uses a program that works out the figures or values you want to know about regarding the loan. For example, you may enter the mortgage amount, the mortgage term in terms of years, and the interest rate expressed in percentage form. The mortgage affordability calculator will then give you the monthly repayment, the total amount to pay in that loan term, and the total interest paid.

What is a Mortgage Calculator?

So, a mortgage calculator is actually a tool that applies a mathematical mortgage monthly payment formula to help in mortgage computations. It is a useful tool for checking different values that are involved in mortgaging. In addition to knowing the values, you are also able to find out if you can qualify for a mortgage loan or not. So, if you are looking for a mortgage loan in Canada, you will find it very useful to apply the Canadian mortgage calculator.

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 Why Use a Mortgage Calculator in Canada

 You can use a mortgage calculator Canada tool for many reasons and one is that you can get a loan that attracts the lowest interest rate. Because the calculator will show you the loan interest rate you will be paying and the interest amount, you are able to know if that is the kind of loan you want or not. You also learn what the effects of the loan will be to you and this should be your most important thing. Calculating the mortgage amount you will take is very important so that you don’t find yourself in financial troubles or worse still a foreclosure situation.

That said, a Canadian mortgage calculator will help you in the following ways:

Obtaining a Pre-approval

You may think that getting a mortgage is easy, however, if you don’t know how it is going to affect you, it could turn out a big burden on your finances. Individual homebuyers often are not the only people having a say regarding the mortgage they should take, lending institutions also have their voice. The lenders can dictate the amount you will get. The lending institutions may determine what homebuyers should take as a mortgage loan. A mortgage calculator Canada is a very essential tool when you want to determine what you should be willing to apply as a loan to buy a home. If you use the calculator, you can find out the amount you can get and then make your loan application for approval. The pre-approval knowledge you have helps you make the right application so that you are not denied the loan. The loan calculator allows you to evaluate your pre-approval process by knowing how much of a mortgage you may be able to get approved for.

 Calculate other Expenses Related to the Mortgage

Many people will just look at the amount of mortgage that they may be approved and then start thinking of the properties that are the top of the budget. It’s important that homebuyers taking mortgage loans to consider other expenses related to the mortgage. For example, you are paying interest on the loan. Since a mortgage involves a big sum of money, many people will have a significant amount going to service the interest of the loan. Besides the interest rates, the homebuyers will also be paying homeowners insurance and taxes.

All these are expenses that may be related to the mortgage loan and they should be factored in when taking the loan and making key decisions regarding the amount to take and how much to pay in monthly payments. Other people may need to have mortgage insurance, though this depends on the amount of down payment they will be making when they are getting the loan. If you plan for these expenses, you are in a better position to budget for the loan and sail through in your payment plan. A mortgage calculator comes in handy to help you in making these key decisions.

 Helps Factor-in Other Expenses

Because a mortgage has a big impact on your finances, there is need to take other expenses into account, and not just those related to the mortgage. For example, a homeowner unlike a renter, will not get services like heat, television, water, and others included the loan. So, homeowners should not just be worrying about only the mortgage related expenses but also other costs they have to incur in their day to day housing and financial life. A mortgage calculator becomes an important tool for you to consider other expenses that you incur before you take the mortgage loan. These expenses may include furniture, groceries, upkeep of your property, and the general maintenance of the property. If you are trying to figure out what you can reasonably afford when taking a mortgage, then all the other expenses have to be put into the picture.

 Helps with a Trial Run

When you use the Canadian mortgage calculator to find out the interest amount and the loan you may be approved for, you can give yourself a test. This is what is called the trial run – you are simply trying to test yourself and see if you can actually meet the challenge of paying for the mortgage or not. So, once you have decided the amount you want to take and determined the amount you will be spending per month, you should do a trial run. This will allow you to measure your ability to repay the loan without having a hitch. Remember that you have the other expenses, so you don’t want to overburden yourself.

What basically you want to do is find out if you can set aside that amount of money for paying the loan after spending on all other expenses for the month. If you find that you cannot do it, then you should reexamine your decision and choose a property that is less expensive or pay a larger down payment. And you know, when you make a larger down payment, it may reduce the interest rate you are paying, which also reduces the monthly repayments amounts.

Make wise Overall Mortgage Decisions  

Many people want to get the home that is at the top of the budget, which means getting a larger mortgage. But that can be tricky and often a bad decision. It is likely that you don’t need that expensive home for now, so you can go for a smaller house that is affordable and won’t put pressure on you through mortgage payment. You can then later on move to a bigger home or just expand the home you purchase rather than considering an expensive house in the beginning that only creates more financial troubles in your mortgage payment.

The decision on the amount you will be spending on a mortgage can be very intricate and unless you have taken a serious thought about it and considered all the expenses and costs you will be meeting, it is easy to make the wrong decision. However, a tool that can assist you in the process is the mortgage calculator. It may not show you exactly how much you should take, but it will help you get an estimate of the amount and then you can work out the interest you are paying, the monthly payments, and the other expenses and do a trial run to see if things are working out for you. The goal is to ensure you don’t stretch your budget to the limit and that you have money left with you for servicing the mortgage during the repayment period.

Features of a Mortgage Calculator 

A mortgage loan calculator should be simple and easy to use. It should also provide you with the kind of information or values that you want regarding the cost of a mortgage and what you are likely to be approved for. The calculator should tailor your mortgage calculations so that it represents the exact way the bank is charging. For example, a mortgage rate comparison helps you compare the different rates different banks are charging for their mortgage. You should determine which rate is going to work for you by doing comparisons. This way, you can get an affordable mortgage.

A fast, easy-to-use interface helps you to calculate your mortgage values in just a minute. If you encounter troubles when using the calculator, you should be able to get support, so a reliable access to help is needed.

In addition to comparing the rates for different banks, a mortgage calculator should tailor the calculations to match with those of your bank’s rates. The calculator allows you to customize the calculations to your bank. The loan interest calculator should also help you to create a schedule for payment of your mortgage while also allowing you to be send updates should the mortgage rates changes with time.

It is important to note that the different Canadian mortgage calculators may have different features, but they should be able to give you as much and accurate information and values as needed. They should also be updated often to reflect the current mortgage rates and those of individual banks.

Mortgage Amortization and Payment Frequency

 The amortization schedule or period is the length of time that a home buyer who has taken a loan will be able to take to pay off the entire mortgage. In Canada, the amortization period of a mortgage loan is 25 years. You may want to know that the amortization period is different from the mortgage term, which is the length of time you commit yourself to a specific rate, loan condition, and lender. The typical mortgage term in Canada is about 5 years.

When you talk of payment frequency, it may differ but many people would pay their mortgage loan once in a month. There is also the semi-monthly payment frequency, which implies that you pay twice a month meaning you have 24 yearly payments. Bi-weekly payments mean that you pay an amount after every two weeks and that would total to about 26 payments in a year. There are the accelerated bi-weekly payments, which mean you are paying the same amount that you would be paying if you had the semi monthly option, but this time, you will be making 26 instead of 24 payments in a year. The accelerated biweekly payments allow you to pay off your mortgage faster than in typical payments meaning you also save on the interest you have to pay.

When you make a down payment that is less than 20 percent of the home purchase price, you may have to pay for the mortgage default insurance. In this case, you may find that the maximum allowable amortization schedule or period, or the length of time you will be taking to pay the loan suppose the interest does not change, and you do all your regular payments, then the amortization period would be 25 years.

While mostly the amortization period is placed at 25 years, home buyers taking mortgage loans in Canada may accelerate that period to a shorter period so that they reduce the interest charges provided that they are comfortable with paying larger payments.

How to Use a Mortgage Calculator

 To use a mortgage loan interest calculator, you will enter the mortgage amount in Canadian dollars. You will also enter the mortgage term in years and then the interest rate in percentage. If you have a more advanced calculator, you may have other values to enter. When you enter the values as said, you will be able to get the total interest you will pay for that loan amount you entered. It is important to note that the Canadian mortgage interest calculator is only for Canada because different countries have different ways of calculating mortgage interest. The monthly mortgage payment calculator will show you the values you need for your monthly mortgage payment computations.

Manual Mortgage Calculator for Canada

 If you want to calculate the value for your mortgage manually, you may use this formula:

The above mathematical formula is for calculating the mortgage payments for every month in which case “M” stands for monthly payment and “P” stands for the principal amount, “r” stands for interest rate, and “n” stands for the number of payments you make.

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Canadian HST

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In Canada, you may find that in addition to the goods and services tax (GST), some territories and provinces have an additional form of sales tax they call the provincial sales tax (PST). In majority of the provinces, the GST is harmonized with PST to come up with what is called the Harmonized Sales Tax (HST). The rates may be different for the provincial sales tax, but the GST rate remains at 5%. Any business that is charging HST meaning both GST and PST will be able to claim the credits (Input tax credits – ITC) for the purchases that they made in time of their commercial activity. When filing for their HST returns, business owners can claim for their ITC or input tax credits. The input tax credits are supposed to be 100 percent of the HST that you incurred on supplies made for commercial activities. However, you should realize that you cannot claim input tax credits if the purchases made are related to providing supplies that are regarded or classed as exempts. Also, in most of the cases, HST paid on entertainment and meals only allows for 50% recoverable amount, so the other 50% may not be considered a deductible expense.

HST Rates

Where HST charges prevail, the rates encompass both the provincial sales tax and goods and services tax. The provincial sales tax rates may differ from one territory or province to another, and also not all territories and provinces charge the provincial rates. Where a province or territory does not apply PST, then the GST applies. For the case of Ontario, the HST is at 13%, a rate that became effective from the 1st of July 2010. The British Columbia returned to the GST rate of 5%, but before then, they had a HST rate of 12%.

Other provinces and territories that have maintained the HST system include New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island where the rates of HST are at 15%.

A business will charge HST if it exceeds the limit of $30,000 that is considered a small supplier. A business may be a partnership, corporation, or sole proprietor and the taxable revenues before the expenses are deducted should be more than $30,000 in order for them to charge and pay the HST amount. If it’s a non-profit entity, the total taxable revenue should be more than $50,000 in order to be required to pay the tax. There are, however, businesses that regardless of their scale of operation, may not be classed as small supplier, for example, taxi and limousine operators. These have to get a GST account no matter the size of their income.

If you want to calculate the HST charge, you can use a HST calculator. The calculator has been programmed with the different PST rates and the standardized GST rates to have one single valued added sales tax that is called the HST. For example, if you use a GST/HST calculator, you find that for Alberta, CA, the rate is only 5% because this territory has not implemented the harmonized sales tax system. In other words, there is no provincial sales tax and the territory only uses the goods and services tax that is charged by the federal government.

The Canada Revenue Agency (CRA) is the only body that is responsible for collecting the provincial sales tax from the different territories. Although the territories or provinces have implemented the HST system, they cannot collect the taxes for themselves.

If you want to calculate the tax manually, you may use this formula;

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HST Calculation Formula:

HST Amount = Amount with out Sales tax*(HST Rate/100)

Another formula for calculating HST is; 

HST Registration

Registering for HST is the same as that of GST and therefore a business will need to visit the Canada Revenue Agency website page. You may also call CRA at 1-800-959-5525. A business number is needed prior to registering for the HST account.

In Quebec, you can register for HST by going to the Revenu Quebec web page or calling 1-800-567-4692. The date of registration depends on whether it is a voluntary registration or mandatory registration. Registering on voluntary basis even when you have not exceeded the limit for small supplier (meaning your revenues for the four calendars quarters has not surpassed $30,000 for a business or $50,000 for a non-profit organization) allows you to get input tax credits for the HST or GST amount that you paid. In essence, you find that most of the rules for registering for GST also apply for the HST.

You may not register for HST account if you provide HST exempt goods and services such as child care services, used residential housing, and music lessons. You may want to know what kind of services and goods are exempt of HST and GST.

Even when you don’t qualify for HST, you may want to register because it has some advantages. No matter the type of business you are doing, you directly or indirectly pay for HST on taxable goods and services that you acquire during the time of your commercial activity. If you have registered for HST, you can recover part of the HST amount you paid out for business purchases in what is called input tax credits. You may feel that because you are classed as a small supplier, there is no need for you to register for HST account. It makes sense if you have this account because of the input tax credits benefit.

One thing for sure is that you are paying for tax whether you are registered or not, because there are purchases you will make as a business. If you don’t have a HST account, there is no way you can get back the HST amount you paid out. You find that the amount you are paying as a small supplier to acquire services and supplies during the year may be quite a lot even if it does not reach the threshold of $30,000. So, there is economic sense when you have the HST account. Also, input tax credits are considered stackable, but only for a period of four years. The amount for the four years can total to huge chunk of money that could just be lost somewhere because you have not been able to claim it.

HST Rebate 

You may also apply for a rebate in case you made an error when charging the HST. This allows you to get a refund for the amount that you have paid and which you shouldn’t have paid. The HST rebate depends on the situation at hand. For example, the rebate application or claim for refund should be done within two years from when you remitted the amount deemed to be in error. If that period expires, you may not be able to get the refund. You also need to know that that you only submit one rebate application for a calendar month. The information required includes; the reason you say that the amount shouldn’t be remittable or payable and the way you did the calculations. You may want to provide copies of purchases and receipts to support your claim.

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Canadian GST

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In Canada, there are various kinds of value added tax and the most profound is the GST standing for Goods and Services Tax. GST is a multi-level value added tax that was introduced in the country on 1st January 1991. The tax system was introduced by the Prime Minister serving then, Brian Mulroney and the finance minister Michael Wilson. Goods and Services Tax replaced the hidden 13.5 percent MST, which standards for Manufacturer’s Sales Tax. The reason GST replaced MST was because it was impairing the ability of the manufacturing sector in the country to have a competitive playground for exporting goods and services. Today, the GST rate is at 5%, a figure that became effective on 1st January 2008. 

The Goods and Services Tax applies to most goods and services sold in Canada. However, despite this levy, some provinces still uphold provincial sales taxes and in this case, GST is charged on top of the provincial retail taxes. For example, provinces such as British Columbia, Manitoba, and Saskatchewan have both GST and Provincial Sales Tax (PST). Some other provinces including Ontario, PEI, New Brunswick, Nova Scotia, Labrador, and Newfoundland have combined both GST with PST to have what is known as Harmonized Sales Tax (HST).

The provinces that do not have provincial sales tax, they use GST. The harmonized sales tax and provincial sales tax rates are different for each province and a lot of products and services are exempted from the levy. It may be quite difficult for you to know what exactly you need to do and therefore invoicing is a big headache for businesses. However, you may want to look out for the PST, GST as well as the HST rates for the different provinces.

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Canadian GST Exempts and Zero-Rated Items 

Some of the items that may be exempted from GST include residential rent, sale of a used residential housing in the event that the owner isn’t the builder and there has been no substantial renovation done on the building. Exempts from GST may also be allowed on residential condominium fees, dental and medical services, college and university courses, toll charges, music lessons, and government or municipal services including licenses, recycling collection, garbage collection, sewerage, and water distribution. There are also zero-rated items where a purchaser may not pay GST for example basic groceries, prescription drugs, and medical devices. However, a seller may claim ITC credits for GST that was paid on expenses and purchases relating to the sale of such zero-rated items. 

Registering for Canadian GST

You will need to have a business number (BN) for you to register to collect GST. You may register online by visiting the Canada Revenue Agency (CRA) website. Even if you are registering a business or corporation, you will need to provide your personal information and other details regarding the business. Another way you can register is by phone. What you need to do is call CRA at CRA at 1-800-959-5525.

If you are registering for GST in Quebec, you will need to go to the webpage Quebec at http://www.revenuquebec.ca/en/sepf/services/sgp_inscription/default.aspx.

You may also register by phone at 1-800-567-4692.

Before registering for GST account, you may want to find out if you are required to do so or not. If you provide only exempted goods and services, then you cannot register for the tax account. You, however, are required to register for GST if you provide taxable supplies within Canada unless the supplies are connected with real property that has been sold other than during the course of the business. You also need to register if you aren’t classed as a small supplier.

You are a small supplier if your business sales don’t exceed a threshold of $30,000 within four consecutive calendar quarters. However, you may decide to have voluntary registration in the event that you provide taxable supplies within Canada. If your sales exceed $30,000 limit in a single calendar quarter, then you are not classed as a small supplier. You actually cease being a small supplier on the month that you exceeded the limit for a small supplier and therefore, you are required to register for GST within a period of 29 days from that supply, which crossed you over from the small supplier limit.

Once you register for GST account, you will be issued with a GST number that you pay your tax against. You will need to confirm the number once you have registered so that you make sure it is the correct one.

In voluntary GST registration, you should ensure that you charge and collect as well as remit the GST applying on the taxable supplies including property and services. You should also file GST returns regularly and have to remain registered for 12 months before cancelling the registration, or unless you stopped the commercial activity, you were taking. When registered, you can claim your input tax credit (ITC) for the GST paid and payable on purchases and operating expenses you made.  

Remitting GST Amounts

When you want to remit the GST amounts, you should know your GST filing period. It may be monthly, quarterly, or annually. When choosing a method of GST payment, you can go for electronic method, or pay at a financial institution, or remit by mail. If you are remitting a payment of $50,000 or more, that should be done electronically, but you may also pay at a financial institution. You cannot pay that kind of amount by mail. In electronic payment of your GST, you can go to the CRA’s “My Payment” option where you make payments online right from an account using CRA website platform. 

You can use a Canadian GSA calculator to calculate the amount of tax you should remit. This makes the process easy for you rather than struggling with the manual calculations. When using the calculator, you have to select the province or territory because there may be different rates or systems used for example, the Harmonized system. 

Applying For GST Rebate

Before you apply for GST rebate, you want to first determine if you’re eligible depending on your specific situation. Business persons may apply for rebates on GST amount paid if there were errors when they were charging the GST or if they paid for a non-taxable item.

You can visit the Canada Revenue Agency website to find out if you are eligible or not – just go to https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/gst-hst-rebates/general-gst-hst-rebate-application.html

If you, for example, paid a certain amount as GST and you discover there was some error you made to the supplier, you may contact the supplier to give you a refund or credit of that amount. If that works out, then you don’t have to apply for GST rebate, and that’s usually the easiest and simplest way to recover your money. But should the supplier fail to refund you or credit that amount, you can apply for the rebate to the CRA.

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