Canadian Mortgage Calculator
Estimate the monthly payment and total interest on a Canadian fixed-rate mortgage, with the semi-annual compounding required by the federal Interest Act.
Monthly mortgage payment
£2,908.02
- Loan amount
- £500,000.00
- Amortization
- 25 years
- Total interest paid
- £372,407.48
- Total amount paid
- £872,407.48
- Effective annual rate
- 5.062%
Canadian fixed-rate mortgages compound semi-annually under the Interest Act, not monthly. The equivalent monthly rate is (1 + nominal/2)^(1/6) − 1, which is a touch lower than nominal/12 — so a 5% Canadian mortgage costs about $15 less per month per $500,000 than a 5% US mortgage of the same term.
How to use this calculator
Enter the loan amount in Canadian dollars, the nominal annual interest rate quoted by your lender, and the amortization period in years (25 is the cap for insured high-ratio mortgages; 30 is available on conventional loans with at least 20% down). The calculator returns the monthly principal-and-interest payment, the total interest paid over the full amortization, the total amount paid, and the effective annual rate so you can compare against a US-style monthly-compounded mortgage at the same headline rate.
How the calculation works
Section 6 of Canada's federal Interest Act requires lenders to quote fixed-rate mortgage rates as a nominal rate compounded semi-annually, not in advance. Converting that to an equivalent monthly rate for payment maths gives i = (1 + r/2)^(1/6) − 1, where r is the quoted annual rate. The closed-form amortising payment is then M = L × i / (1 − (1+i)^−n), with L the loan principal and n the amortization in months. Semi-annual compounding produces a marginally lower effective monthly rate than the US convention of r/12, so a Canadian mortgage at the same nominal rate has a slightly lower monthly payment than a US one — by roughly $15 per month on a $500,000 25-year mortgage at 5%.
Worked example
A 500,000 CAD mortgage at 5.00% over 25 years amortization. The equivalent monthly rate is (1.025)^(1/6) − 1 = 0.4124%. Over 300 months that produces a payment of about 2,908.02 CAD. Total interest paid over the full amortization is about 372,400 CAD and the total paid back is about 872,400 CAD. The effective annual rate is 5.0625%, which is what the same nominal rate would cost if compounded monthly instead of semi-annually.
Frequently asked questions
Why does Canada use semi-annual compounding when the US uses monthly?
It is a legal requirement, not a convention. Section 6 of the federal Interest Act (R.S.C. 1985, c. I-15) requires that fixed-rate mortgages secured on Canadian real property state the rate of interest as a yearly or half-yearly rate, not in advance. In practice lenders quote a nominal annual rate and compound it semi-annually. The intent of the rule is consumer protection: monthly compounding on the same nominal rate would cost the borrower more in effective interest, so the semi-annual cap produces a slightly lower effective rate. Variable-rate mortgages are usually written with monthly compounding because the rate floats with the lender prime rate, but the headline number you see in fixed-rate advertising and disclosure is semi-annually compounded.
What is the maximum amortization on a Canadian mortgage?
For most insured high-ratio mortgages (down payment under 20%, requiring CMHC, Sagen or Canada Guaranty insurance), the cap is 25 years. Conventional mortgages with at least 20% down can be amortized over up to 30 years. In late 2024 the federal government extended the 30-year option to first-time buyers and buyers of newly built homes even on insured mortgages, as part of the housing affordability package. Some non-prime and alternative lenders will write 35-year amortizations on uninsured mortgages, but the rate premium is typically 50 to 150 basis points and the regulated big-bank rate sheet stops at 30. Use the amortization input to model whichever is offered to you.
How is this different from the US mortgage calculator?
Two main differences. First, the compounding convention as discussed above — Canadian fixed rates use semi-annual compounding, US rates use monthly, so at an identical nominal rate the Canadian monthly payment is a few dollars lower. Second, Canadian mortgages are structured as renewable contracts: the most common product is a 5-year fixed term within a 25-year amortization, meaning every 5 years you renegotiate the rate against the remaining balance. The amortization is the long horizon used by this calculator; the term is the rate-lock window, which does not change the maths of the monthly payment until renewal. US mortgages typically lock the full 15- or 30-year rate up front. This calculator gives you the payment at the rate you input and assumes that rate runs to full payoff — at renewal, re-run the calculator with the new rate and remaining balance.
Does the calculator include property tax, insurance, or condo fees?
No. This is a pure principal-and-interest calculator. Most Canadian lenders quote PITH (principal, interest, taxes, heating) when assessing affordability, and many bundle property tax into the monthly payment via an escrow account. To estimate the full carrying cost of a home, take the figure here and add monthly property tax (annual tax / 12), home insurance (typically 50 to 150 CAD per month), and any condo fees if applicable. If you are insured (LTV over 80%), CMHC or private insurance premiums are usually added to the loan principal at closing rather than paid monthly, so they are already reflected if you enter the post-insurance loan amount.
What rate should I input — the discounted rate or the posted rate?
Always the rate you will actually be charged, which is the contract rate stated on your commitment letter. Big-bank "posted" rates (the ones shown on branch signs and in newspaper ads) are inflated reference rates used mainly for prepayment penalty calculation; almost no one borrows at the posted rate. The contract or discounted rate is typically 100 to 200 basis points lower for a 5-year fixed and is what a mortgage broker quotes you. If you are still shopping, use the broker's best rate for your credit and down payment band — sites like RateHub.ca and RateSpy.com publish current discount rates by province.
How accurate is this calculator for stress-test purposes?
It is accurate for the payment at the rate you enter. Canadian regulators require lenders to qualify borrowers at the higher of the contract rate plus 2.00 percentage points or the Bank of Canada qualifying rate (currently around 5.25%), so the stress-test payment is what the calculator returns when you enter that higher rate. The qualifying payment, not the contract payment, is what is used in the OSFI Guideline B-20 affordability test. For pre-approval shopping, run the calculator twice: once at the contract rate to see what you will actually pay, and once at contract + 2% to see what you must qualify for.