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How to Use a Mortgage Calculator

April 17, 2019
3 mins
A woman holds up her coffee mug and stares out the window as she works on her laptop

Looking at mortgage rates for a new house? Need a mortgage calculator? Canada residents know it's easy to fall in love with your dream home. But, it helps to factor in the mortgage loan amount and interest rate beforehand. You want to determine how much house you can afford  -  preferably before you call the movers!  

Use these steps to walk-through how to use a mortgage calculator. You can find a mortgage that's affordable (and, then tell the kids to go pack their toys).  

When to Use a Mortgage Payment Calculator  

A mortgage payment calculator can help determine your monthly mortgage payment. The payment is based on interest and principal (the mortgage).  

To use a mortgage payment calculator, you need:  

The mortgage loan amount: If the home costs $50,000, and you put down 20 percent, or $10,000, the loan balance is $40,000. 

The payment type: Do you want monthly or bi-weekly payments?   

The loan term:  Typically loan terms (amortization) are 30-years unless you select a shorter term.  

Your down payment: Generally its 20 percent, but if you put down 5-10 percent, you will have to pay CMHC mortgage insurance. 

The province: This can help you find competitive bank rates in your area. 

Here’s an example of how the loan calculator works.  

Let’s say you live in Ontario and find a property for $750,000. And, you want a 30-year loan, monthly payments and the interest rate is 3 percent. And, you put down 20 percent or $150,000. That leaves a loan amount of $600,000. Plugging those numbers into the calculator, your monthly payment is $2,524 (see below). 

Not bad. But, let’s say instead of 20 percent down you put down 10 percent or $75,000 and all the other criteria are the same. 

Using our convenient mortgage calculator, the loan amount is now $675,000 and your new monthly payment is $2,839.  That's a much higher monthly payment. And, remember, on less than 20 percent down you have to pay mortgage insurance, too. That means your loan amount will be even more. This is one of the reasons banks want you to pre-qualify to find out how much house you can afford. Your pre-qualification is determined by your salary, credit, employment and banking information. 

Next, let’s take a look at other factors that go into your monthly payment. 

Other Fees to Include With Your Mortgage Payment 

Aside from your mortgage and interest, when a bank pre-qualifies you for a loan, there are other associated fees with your mortgage.  

These typically can include:  

Homeowner's insurance: This is insurance to protect your home. 

Property taxes: You might have to pay taxes depending on the province you live in or move to. 

HOA fees: If you move to a condo, you might have monthly maintenance fees. 

Tip: If you're unsure how much these fees are, don't guess. Get a quote for homeowner's insurance here. 

When to Use a Mortgage Affordability Calculator  

When the bank pre-qualifies you for a loan, they will ask for all your monthly bills. They want to ensure that you can afford your mortgage payment if you or your spouse become sick or if either of you loses your job.  

Use the mortgage affordability calculator to determine how much house you can afford. 

Aside from your mortgage, your other bills/debts might include:  

  • Auto insurance and your car note 
  • Medical insurance
  • Credit card bills
  • Utilities
  • Any other monthly debts you have

Looking for the Best Mortgage Rate? 

Finding a dream home is within reach. But, it helps to know how much home you can afford. Use a mortgage calculator to help determine your potential monthly payment. For help with mortgage rates or if you have questions, contact RATESDOTCA. 

Give RATESDOTCA the location where you want your new home and get a fast, personalized quote. With the best rates from top lenders and mortgage brokers in your area, you might find your dream home now. Get your free quote today! 

RATESDOTCA Team

The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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