Canadian Mortgage Calculator

Canadian fixed-rate mortgages compound semi-annually, not in advance — a requirement of the federal Interest Act. Most online calculators use the American monthly convention, which quietly overstates your payment. This one does it properly, and shows you the difference.

Why Canadian mortgages are calculated differently

Section 6 of Canada's federal Interest Act requires that mortgage interest be calculated no more frequently than semi-annually, not in advance. In practice this means the rate your lender quotes is a nominal annual rate compounded twice a year — not twelve times, which is the American standard.

The mathematics differ accordingly. To find the effective monthly rate on a Canadian mortgage you take the sixth root of the semi-annual rate:

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

An American calculator simply divides the annual rate by 12. Because compounding twice a year is less aggressive than compounding twelve times, the correct Canadian figure is always slightly lower. On a $500,000 mortgage at 6% over 25 years the difference is about $22 a month — roughly $6,700 across the amortization. Not life-changing, but it is real money, and it means most calculators tell Canadians a payment they will never actually be charged.

A 6% quoted rate has an effective annual rate of 6.09% in Canada. Under the US convention the same 6% nominal rate works out to 6.17%.

Term is not amortization

This trips up nearly every first-time buyer. Amortization is how long the mortgage takes to disappear entirely — usually 25 years. Term is how long your current contract and interest rate are locked — usually 5 years. At the end of the term you still owe a substantial balance and must renew at whatever rates prevail then.

The calculator shows your balance at the end of the term for exactly this reason. On a 25-year amortization you'll renew four more times, and each renewal is a genuine risk: a household that comfortably afforded 2% in 2021 faced a very different payment renewing at 5–6%. Stress-test your budget against a rate two points above your current one before committing.

Accelerated payments: the closest thing to free money

The payment frequency dropdown is worth experimenting with. The distinction matters:

Bi-weekly takes your monthly payment × 12 and divides it into 26 payments. You pay the same total per year, just spread differently. Barely changes anything.
Accelerated bi-weekly takes your monthly payment and simply halves it — but you make 26 of those, which equals 13 monthly payments a year instead of 12. That extra payment goes almost entirely to principal.

The result is typically three to four years off a 25-year mortgage and tens of thousands in saved interest, for a payment most people barely notice because it aligns with a bi-weekly paycheque. Switch the dropdown between "Bi-weekly" and "Accelerated bi-weekly" and compare the "Paid off in" figure.

What this calculator does not include

Property tax, home insurance, condo fees and CMHC insurance premiums are all real costs and none are included in the payment above. If your down payment is under 20% you'll pay a mortgage default insurance premium, which is normally added to the mortgage — our CMHC insurance calculator works that out. For land transfer tax and the rest of the closing costs, see the land transfer tax calculator.

Frequently asked questions

Is the difference from a US calculator really only $22 a month?

On a $500,000 mortgage at 6% over 25 years, yes — about $22 monthly and roughly $6,700 over the amortization. The gap widens with larger mortgages and higher rates. It's small in percentage terms but it's the difference between a figure that's correct for Canada and one that isn't, and it compounds over decades.

Does semi-annual compounding apply to variable-rate mortgages too?

Variable-rate mortgages in Canada are typically compounded monthly rather than semi-annually, because the rate itself moves with prime. This calculator uses the semi-annual convention, which is correct for fixed-rate mortgages — the vast majority of Canadian mortgages. For a variable rate, our standard mortgage calculator with monthly compounding is the closer model.

What happens at renewal?

Your lender offers a new rate for a new term on the remaining balance. You are free to move to another lender, and switching often beats the renewal letter — lenders reserve their sharpest pricing for new business. Start shopping about four months before renewal; most lenders will hold a rate for you that long.

How much can I prepay without a penalty?

Most Canadian mortgages allow a lump-sum prepayment of 10–20% of the original principal each year, plus the option to increase your regular payment by a similar percentage. The exact privileges vary by lender and are set out in your commitment letter. Prepayments go entirely to principal, so they're the most efficient dollar you can put toward a mortgage.

Should I take a 30-year amortization?

Since December 2024, 30-year amortizations are available on insured mortgages for first-time buyers and purchasers of new builds. It lowers the payment and raises total interest substantially. Run both here and compare the "Total interest" line — then decide whether the monthly relief is worth the long-run cost.