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.
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.