# Formula to calculate mortgage payment excel

### Formula to calculate mortgage payment excel -

## Mortgage Payoff Calculator

### Planning to Pay Off Your Mortgage Early?

Use the "Extra payments" functionality to find out how you can shorten your loan term and save money on interest by paying extra toward your loan's principal each month, every year, or in a one-time payment.

### Understand Your Mortgage Payment

Your *mortgage payment* is defined as your principal and interest payment in this mortgage payoff calculator. When you pay extra on your principal balance, you reduce the amount of your loan and save money on interest.

Keep in mind that you may pay for other costs in your monthly payment, such as homeowners’ insurance, property taxes, and private mortgage insurance (PMI). For a breakdown of your mortgage payment costs, try our free mortgage calculator.

### Accelerate Your Mortgage Payment Plan

Get creative and find more ways to make additional payments on your mortgage loan. Making extra payments on the principal balance of your mortgage will help you pay off your mortgage debt faster and save thousands of dollars in interest. Use our free budgeting tool, EveryDollar, to see how extra mortgage payments fit into your budget.

### Calculate Different Scenarios

See how early you’ll pay off your mortgage and how much interest you’ll save.

Let’s say your remaining balance on your home is $200,000. Your current principal and interest payment is $993 every month on a 30-year fixed-rate loan. You decide to make an additional $300 payment toward principal every month to pay off your home faster. By adding $300 to your monthly payment, you’ll save just over $64,000 in interest and pay off your home over 11 years sooner.

Consider another example. You have a remaining balance of $350,000 on your current home on a 30-year fixed rate mortgage. You decide to increase your monthly payment by $1,000. With that additional principal payment every month, you could pay off your home nearly 16 years faster and save almost $156,000 in interest.

## Mortgage Payment Calculator 2021

### Glossary and FAQ

Your mortgage’s payment frequency is how often you will make mortgage payments.

Your mortgage payment frequency can be:

- Monthly
- Semi-monthly
- Bi-weekly
- Weekly

There are also accelerated payment frequency options:

- Accelerated bi-weekly
- Accelerated weekly

### What’s the difference between monthly and bi-weekly payment frequency?

- Monthly mortgage payments are made once per month (12 times per year).
- Bi-weekly mortgage payments are made once every two weeks (26 times per year).

### How many bi-weekly payments are in a year?

There are 26 bi-weekly payments in a year. This is because there are 52 weeks in a year. Since a payment is made every two weeks, 52 weeks divided by 2 means that there will be 26 bi-weekly mortgage payments in a year.

= 26 bi-weekly payments in a year

Another way to look at this is to see how often a bi-weekly payment is made. Bi-weekly payments are made every 14 days. Since there are 365 days in a year, 365 days divided by a payment made every 14 days would give us 26 bi-weekly payments every year.

= 26 bi-weekly payments in a year

### Mortgage Payment Frequency and Payments Per Year

Payment Frequency | Payments Per Year | Equivalent to Monthly Payments per Year |
---|---|---|

Monthly | 12 | 12 Monthly Payments |

Semi-Monthly | 24 | 12 Monthly Payments |

Bi-Weekly | 26 | 12 Monthly Payments |

Accelerated Bi-Weekly | 26 | 13 Monthly Payments |

Weekly | 52 | 12 Monthly Payments |

Accelerated Weekly | 52 | 13 Monthly Payments |

### Are semi-monthly mortgage payments the same as bi-weekly mortgage payments?

Semi-monthly mortgage payments are not the same as bi-weekly mortgage payments.

With a semi-monthly mortgage payment, your mortgage payment will be made two times per month. For example, you might make a payment on the 1st of the month, and another payment on the 15th of the month.

Semi-monthly mortgage payments split every month into two. This makes two payments every month. With 12 months in a year, you'll be making 24 semi-monthly mortgage payments every year. You’ll simply divide a regular monthly mortgage payment into two.

Bi-weekly payments do not split months into two. Instead, bi-weekly mortgage payments are made every two weeks, which is considered to be every 14 days. While two bi-weekly payments will be made for 28 days, a month has either 30 days or 31 days, except for February. Over a year, this means that you’ll be making 26 bi-weekly mortgage payments, to account for there being 52 weeks in a year.

Bi-weekly mortgage payments have two extra payments every year, equivalent to one month of mortgage payments, over the amount of payments for a monthly or semi-monthly mortgage payment.

### Accelerated Mortgage Payments

Accelerated bi-weekly and accelerated weekly mortgage payments also gives you the equivalent of an extra monthly mortgage payment every year, but it’s different from non-accelerated bi-weekly and weekly payments in that the mortgage payment amount is not reduced.

### Non-Accelerated Mortgage Payments

Non-accelerated bi-weekly and weekly mortgage payments are based on what a monthly mortgage payment would have been. For non-accelerated bi-weekly, you would calculate the payment by taking the monthly mortgage payment, multiplying it by 12 to get the amount to be paid every year, and then simply dividing it by 26 bi-weekly payments. You’ll still be paying the same total amount every year as you would with a monthly mortgage payment. You’ll simply be paying it over two extra payments, which means each non-accelerated bi-weekly payment is smaller.

The same thing happens with non-accelerated weekly mortgage payments. To calculate it, you'll also multiply the monthly mortgage payment by 12 to get the amount that you'll need to pay per year, and then divide it by 52 weeks. A weekly payment is made every 7 days, and it being non-accelerated means that you will still be paying the equivalent amount of a monthly mortgage payment, just over smaller individual payments.

### How Accelerated Mortgage Payments Work

Accelerated mortgage payments are the payment frequency options that will allow you to pay off your mortgage faster and save you potentially thousands in mortgage interest costs.

With accelerated bi-weekly payments, you'll still make a payment every 14 days (two weeks), which adds up to 26 bi-weekly payments in a year. The part that makes it accelerated is that instead of calculating how much an equivalent monthly mortgage payment would add up to in a year, and then simply dividing it by 26 bi-weekly payments, accelerated bi-weekly payments does the opposite.

To find your accelerated bi-weekly payment amount, you'll divide the monthly mortgage payment by two. Note that there are 12 monthly payments in a year, but bi-weekly payments are equivalent to 13 monthly payments. By not adjusting for the extra monthly payment by taking the total annual amount of a monthly payment frequency, an accelerated bi-weekly frequency gives you an extra monthly payment every year. This pays off your mortgage faster, and shortens your amortization period.

The same calculation is used for accelerated weekly payments. To find your accelerated weekly payment amount, you'll divide a monthly mortgage payment by four.

### Paying Your Mortgage Weekly vs. Monthly

There isn't a large difference between paying your mortgage weekly or monthly, if we're looking at non-accelerated weekly payments. That's because the total amount paid per year is the exact same for both payment frequencies. You'll just pay a smaller amount with a weekly payment, but you'll be making more frequent payments. The real difference is when you choose accelerated weekly payments. Accelerated payments can shave years off of your amortization, and can save you thousands of dollars.

### Which payment schedule is right for me?

While it will depend on your specific situation, here are some general guidelines:

- Most people choose to synchronize their mortgage payments with their monthly or bi-weekly paycheck. This will make it easier to budget.
- More frequent mortgage payments will slightly lower your term and lifetime mortgage cost. Accelerated payment frequencies are also available.

### Mortgage Payment Frequency Example

Let's compare mortgage payment frequencies by looking at a $500,000 mortgage in Ontario with a 25-year amortization, and assume that it has a fixed mortgage rate of 1.5% for a 5-year term.

The monthly mortgage payment would be $2,000. Now, let’s see how much it would be with semi-monthly, bi-weekly, and weekly mortgage payments.

### Comparing a $2,000 Monthly Payment Frequency

Payment Frequency | Payment Formula | Number of Payments per Year | Mortgage Payment Amount | Total Mortgage Payments per Year |
---|---|---|---|---|

Monthly | 12 | $2,000 | $24,000 | |

Semi-Monthly | 24 | $1,000 | $24,000 | |

Bi-Weekly | 26 | $923 | $24,000 | |

Weekly | 52 | $461 | $24,000 | |

Accelerated Bi-Weekly | 26 | $1,000 | $26,000 | |

Accelerated Weekly | 52 | $500 | $26,000 |

Monthly, semi-monthly, bi-weekly, and weekly all add up to the same amount paid per year, at $24,000 per year. For accelerated payments, you’re paying an extra $2,000 per year, equivalent to an extra monthly mortgage payment. This extra mortgage payment will pay down your mortgage principal faster, meaning that you’ll be able to pay off your mortgage quicker.

This mortgage calculator allows you to choose between monthly and bi-weekly mortgage payments. Selecting between them lets you easily compare how it can affect your mortgage payment, and the amortization schedule below the Canada mortgage calculator will also reflect the payment frequency.

The **down payment** is the amount you will pay upfront to obtain a mortgage. Making a larger down payment will reduce the amount that you will need to borrow, which means that your mortgage payments will be smaller.

The down payment that you enter into the mortgage calculator will affect the beginning balance of your mortgage. If you choose a down payment that is less than 20%, then the mortgage payment calculator will include the cost of CMHC insurance premiums into your mortgage by adding it to your principal balance.

### What’s my minimum down payment?

Your minimum down payment depends on the purchase price of your property.

- If your purchase price is under $500,000, your minimum down payment is 5% of the purchase price.
- If your purchase price is $500,000 to $999,999, your minimum down payment is 5% of the first $500,000, plus 10% of the remaining portion.
- If your purchase price is $1,000,000 or more, your minimum down payment is 20% of the purchase price.

If you’re self-employed or have poor credit, your lender may require a higher down payment.

### Are there additional costs or restrictions associated with small down payments?

Yes. If your down payment is below 20% of the purchase price,

- you will be required to purchase mortgage default insurance, and
- your amortization period cannot exceed 25 years.

For more information, see the section on CMHC insurance below.

### What is a high-ratio mortgage?

A mortgage with a down payment below 20% is known as a high-ratio mortgage mortgage. The term ratio refers to the size of your mortgage loan amount as a percentage of your total purchase price. All high-ratio mortgages require the purchase of CMHC insurance, since they generally carry a higher risk of default.

Your mortgage’s amortization period is the length of time that it will take to pay off your mortgage. A shorter amortization period means that your mortgage will be paid off faster, but your mortgage payments will be larger. Having a longer amortization period means that your mortgage payments will be smaller, but you’ll be paying more in interest.

In the mortgage calculator above, you can enter any amortization period ranging from 1 year to as long as 30 years. Some mortgages in Canada, such as commercial mortgages, allow an amortization of up to 40 years.

### What amortization period should I choose?

Here are some general guidelines for choosing an amortization period for your mortgage:

- Most mortgages in Canada have an amortization period of 25 years. Unless you require a longer amortization period due to cash flow concerns, or you can afford to shorten your amortization, a 25 year amortization works well in most cases.
- Choosing a shorter amortization means that you’ll be paying off your mortgage principal balance faster. This will lower your lifetime interest cost, but it will also result in a higher monthly or bi-weekly mortgage payment.
- Insured high-ratio mortgages cannot have an amortization that is over 25 years. If you choose an amortization period of over 25 years, you must make at least 20% down payment.

The term of your mortgage is the length of time that your mortgage contract is valid for. Your mortgage contract includes your mortgage interest rate for the term. At the end of your mortgage term, your mortgage expires. You will need to renew your mortgage for another term or fully pay it off. Your mortgage interest rate will most likely change at renewal.

This mortgage calculator uses the most popular mortgage terms in Canada: the one-year, two-year, three-year, four-year, five-year, and seven-year mortgage terms.

### What term should I choose?

The most common term length in Canada is 5 years, and it generally works well for most borrowers. Lenders will have many different options for term lengths for you to choose from, with mortgage rates varying based on the term length. Longer terms commonly have a higher mortgage rate, while shorter terms have lower mortgage rates.

### What happens at the end of a term?

You will need to either renew or refinance your mortgage at the end of each term, unless you are able to fully pay off your mortgage.

- Renewing your mortgage means that you will be signing another mortgage term, and it may have a different mortgage interest rate and monthly payment. Mortgage renewals are done with the same lender.
- Refinancing your mortgage means that you will also be signing another mortgage term, but you’ll also be signing a new mortgage agreement. This allows you to switch to another lender, increase your loan amount, and sign another term before your current term is over. This lets you take advantage of lower rates from another lender, borrow more money, and lock-in a mortgage rate early.

Your mortgage’s interest rate is shown as an annual rate, and it determines how much interest you will pay based on your mortgage’s principal balance.

You’re able to select between variable and fixed mortgage rates in the mortgage calculator above. Changing your mortgage rate type will change the mortgage terms available to you.

### How does the interest rate affect the cost of my mortgage?

Your regular mortgage payments include both principal payments and interest payments. Having a higher interest rate will increase the amount of interest that you will pay on your mortgage. This increases your regular mortgage payments, and makes your mortgage more expensive by increasing its total cost. On the other hand, having a lower mortgage interest rate will reduce your cost of borrowing, which can save you thousands of dollars.

### What’s the difference between a fixed and variable rate?

- A fixed interest rate is guaranteed to remain unchanged for the length of your mortgage term.
- A variable interest rate can change during your mortgage term. This will not affect your mortgage payment for the duration of the term, but adjusts what percentage of your payment goes to paying off the mortgage principal.

### What controls a variable interest rate?

Variable interest rates change based on your lender’s prime rate, which is controlled by your lender. If your lender increases their prime rate, then your variable interest rate will increase.

Lender’s will usually only change prime rates to match movements in the Bank of Canada’s policy interest rate. If the lender’s funding cost increases, such as through the Bank of Canada increasing their policy rate, then the lender will in turn increase variable mortgage rates. Prime rates are generally similar or identical between different lenders, with all Canadian banks currently having a prime rate of 2.45% as of July 2021.

Your variable mortgage rate is priced at a discount or a premium to your lender’s prime rate.

### Should I choose a fixed or variable rate?

A variable rate lets you benefit from decreases in market interest rates, but it will cost you more if interest rates rise. Fixed rates are a better option if interest rates will rise in the future, but it can lock you in at a higher rate if rates fall in the future.

Of course, it’s not possible to exactly predict future interest rates, but a 2001 study found that variable interest rates outperform fixed interest rates up to 90% of the time between 1950 and 2000. If you’re comfortable with taking on risk, a variable mortgage rate can result in a lower lifetime mortgage cost.

### Skip a Mortgage Payment

Many mortgage lenders offer flexible mortgage payment options, such as the ability to skip a payment or to defer your mortgage payments. Most of Canada’s major banks allow you to skip a mortgage payment, with the exception of CIBC and National Bank.

Generally, you won't be able to skip mortgage payments for mortgages that are insured. Having a CMHC-insured mortgage means that your amortization cannot go over 25 years. For insured mortgages, you'll need to have made a mortgage prepayment that would be equivalent to the amount that you want to skip for you to be able to skip a mortgage payment in the future.

Lenders also have conditions in order to be able to skip a mortgage payment. Your mortgage must not be in arrears, and your current mortgage balance must not be more than your original mortgage balance at the start of your term.

### What Happens If You Skip a Payment?

Skipping a mortgage payment doesn't mean that the lender is giving it to you for free. Skipping a payment just means that you'll be paying it back later. When you skip a mortgage payment, interest that would have been charged would be added to your mortgage balance instead of being paid off. This increases your mortgage balance, which means that you'll be paying interest on your added interest.

If you don’t repay the skipped mortgage amount plus accumulated interest, then you’ll be paying interest on the interest for the rest of your mortgage’s amortization. This could make skipping a mortgage payment a very costly option to take. Fortunately, many lenders allow you to repay your skipped payments without any prepayment penalties.

### How Often Can I Skip Mortgage Payments?

Lender | How Often? |
---|---|

RBC | Once Every 12 Months Or If Prepayments Were Made |

TD | Once Every Calendar Year Or Up to Four Months if Prepayments Were Made |

BMO | Up to Four Months Every Calendar Year |

Scotiabank | If Prepayments Were Made |

CIBC | Never |

National Bank | Never |

RBC allows you to skip one month's worth of mortgage payments once every 12 months. If your mortgage payment frequency is not monthly, then they will need to be skipped consecutively. For example, if you have bi-weekly or semi-monthly payments, then you will be able to skip two consecutive mortgage payments every 12 months. For weekly payments, you'll be able to skip four consecutive weekly payments.

If you have made extra mortgage payments in the same term, you'll be able to skip an equivalent amount of mortgage payments. For example, if you've made two double-up payments, equivalent to two extra monthly payments, then you'll be able to skip two months' worth of mortgage payments.

TD lets you skip a monthly payment, or the equivalent of a monthly payment, once every calendar year. TD only allows you to skip a monthly payment four times throughout the life of your mortgage. For example, if your TD mortgage has an amortization period of 25 years, you won't be able to skip payments more than four times with TD over those 25 years.

TD lets you prepay in advance to skip more payments if needed. This "payment vacation" is allowed for up to four months at a time. For example, you've made four months worth of mortgage prepayments towards your TD mortgage. You'll now be able to skip four months of mortgage payments.

BMO lets you skip one months worth of mortgage payments every calendar year. BMO also has a Family Care Option that allows borrowers to skip four mortgage payments per calendar year to take care of your family, such as caring for a new baby or a sick family member.

Self-employed mortgage borrowers are not able to use BMO's Family Care Option. Borrowers that are receiving mortgage disability benefits from their mortgage insurance are also not able to skip mortgage payments.

Scotiabank’s Miss-a-Payment lets you skip mortgage payments if you have already prepaid an equivalent amount. This could be by making a lump-sum mortgage prepayment, by increasing your regular mortgage payments, or by matching a payment.

### Mortgage Prepayments

Prepaying your mortgage allows you to directly pay down your mortgage principal balance, allowing you to be mortgage-free sooner. Banks and mortgage lenders have limits on the amount of mortgage prepayments that you can pay per year for closed mortgages without being charged prepayment penalties. If you have an open mortgage, you won’t have any prepayment limit or charges.

### How Much Mortgage Prepayments Can I Make?

Lender | Annual Limit (% of original mortgage amount) |
---|---|

RBC | 10% |

Scotiabank | 15% |

TD | 15% |

BMO | 20% |

CIBC | 10% for Fixed Mortgages 20% for Variable Mortgage |

National Bank | 10% |

### Does Mortgage Payments Include Property Tax?

Many mortgage lenders require you to pay property taxes through your lender in your regular mortgage payment, with your lender then paying your municipality. This is because failing to pay your property taxes can lead to your municipality placing a lien on your property, which will be placed in the front-of-the-line before your lender's claim on your home.

If you pay your property taxes through your lender, then your lender will estimate an amount that would need to be paid every month in order to cover the total amount of property taxes for the entire year. If the amount that the lender collected is not enough to cover the actual property tax due, then the lender will advance the due amounts to the municipality and charge you for the shortfall.

Your lender may charge you interest on the amount of any shortfall. The lender may pay you interest if you have overpaid and have a surplus. Property tax bills or property tax notices are required to be sent to your lender, as failing to send it may mean the collected property tax amounts are not accurate.

If your lender pays property tax on your behalf and adds the cost to your mortgage payments, then you will still receive a copy of your municipality's property tax bill, or a mortgage tax bill. Mortgage deferrals or using an option to skip a mortgage payment doesn’t mean that you get to skip your property tax payment or mortgage life insurance premiums too. You will still need to pay your property taxes and insurance premiums, as skipping a mortgage payment only skips the interest and principal payment.

Some lenders allow you to pay property taxes on your own. However, they have the right to ask you to provide evidence that you have paid your property tax.

If paying property taxes on your own, your municipality may have different property tax due dates. Property tax might be paid one a year, or in installments through a tax payment plan. Installments might be monthly or semi-annually.

### What happens if I have a late mortgage payment?

Missing a mortgage payment, whether you forgot to make a payment, you had insufficient funds in your account, or for other reasons, is something that can happen. A mortgage payment is considered to be late if it's not paid on the date that it is due.

Missing a mortgage payment means that you need to catch-up by making a double payment the next month. Otherwise, you will be one month behind on your mortgage payments and have them all considered to be late.

Your lender will try to contact you if you miss a mortgage payment. They will let you know how your missed payment can be made, such as taking the payment before the next payment due date or doubling the payment at the next payment date.

Depending on your mortgage contract, you might be charged a late payment fee or a non-sufficient funds (NSF) fee.

As long as your mortgage payment hasn't been late for a long period of time, and you pay back the missed payment promptly, then your lender may not report it to the credit bureaus. Even so, missing your mortgage payment by one day is still enough to have it considered to be a late payment. If you miss multiple mortgage payments, your lender can report it, which will negatively affect your credit score and will stay on your credit report for up to six years.

While your mortgage lender might offer features such as being able to skip a mortgage payment or mortgage payment deferrals, you have to select to use this feature beforehand. You cannot simply miss a payment and choose to have a skip-a-payment feature applied retroactively.

These requests also take a few days to be processed. If it's within a few days of your payment date, then your current payment might be processed and only your next payment will be skipped. Lenders will also not allow you to use skip-a-payment options if your mortgage payments are in arrears.

### What are mortgage statements?

A mortgage statement outlines important information about your mortgage. Mortgage statements are usually an annual statement, with it being sent out by mail between January and March rather than once every month. You may also choose to receive your mortgage statement online.

For example, TD only produces mortgage statements annually in January, while CIBC produces them between January and March. If you have an annual mortgage statement, it will usually be dated December 31. You may also request a mortgage statement to be sent.

Information on a mortgage statement are up to the end of your statement period and include:

- Current interest rate
- Principal balance
- Mortgage payment amount
- Total of mortgage payments made
- Remaining amortization
- Property tax payment
- Mortgage life insurance or mortgage creditor insurance premiums

### Mortgage Insurance vs. Life Insurance

Mortgage life insurance is an optional insurance policy that you can purchase from your mortgage lender that protects your mortgage balance. If you pass away, a death benefit will be paid to your mortgage lender to pay off some or all of the mortgage balance. If you get a critical illness, disability, or lose a job, you’ll receive a payout that helps cover some or all of your monthly mortgage payments. In all of these cases, your lender is the one that receives the insurance payouts.

With life insurance, you’re purchasing a policy with a beneficiary that you get to choose. You can also choose to purchase a policy with a certain payout benefit, rather than having it tied to the balance of your mortgage.

Mortgage life insurance premiums are based on the borrower’s age and the balance of their mortgage. Premiums are charged as a certain rate per $1,000 of mortgage balance. Mortgage life insurance in Canada is completely optional. A lender can’t force you to purchase mortgage life insurance, no matter your down payment. However, if you make a down payment less than 20%, your lender can require you to purchase mortgage default insurance.

Mortgage life insurance can be easier to obtain, but having a potential insurance benefit that gradually decreases as you make mortgage payments means that the benefit gets smaller while your insurance premiums stay the same.

### Can I Cancel My Mortgage Life Insurance?

Canada’s major banks all allow you to cancel your mortgage life insurance at any time, and to receive a refund if you cancel your plan within the first 30 days. This 30-day free look or 30-day review period is important as it lets you change your mind should you decide that mortgage life insurance isn't right for you.

To cancel, you can call your lender's insurance helpline, complete a form at a branch, or send a written request by mail.

### What is mortgage insurance?

Mortgages with a down payment of less than 20% are required to be insured due to the higher level of risk that they carry. This insurance protects the mortgage lender should you default on the mortgage. Mortgage default insurance does not protect you or help you cover mortgage payments.

The largest provider of mortgage loan insurance in Canada is the Canada Mortgage and Housing Corporation (CMHC), which is owned by the Government of Canada. Some mortgage lenders allow you to go through a private mortgage insurer instead, such as Canada Guaranty or Sagen.

### Is mortgage insurance mandatory?

Mortgage default insurance is required for mortgages with a down payment of less than 20% at a federally-regulated mortgage lender, such as at a bank. If you make a down payment that is 20% or larger, then you will not need to get an insured mortgage. Mortgage default insurance premiums are added as a one-time lump-sum onto your mortgage balance at closing, which means that you’ll be paying for it in your mortgage payments over the life of your mortgage.

Unregulated lenders, such as private mortgage lenders, may allow you to get an uninsured mortgage with a down payment that is less than 20%.

### What mortgages does CMHC insurance not cover?

The CMHC has eligibility requirements that limit the type of mortgages that can be insured.

CMHC insurance will not cover homes with a cost of $1 million or more.

Mortgages with an amortization period greater than 25 years are also not eligible for CMHC insurance.

You can still get CMHC insurance for mortgages with a down payment larger than 20%.

### How much is CMHC insurance?

CMHC insurance premiums are a percentage of your mortgage and are paid by your mortgage lender. Provincial sales tax is added to premiums for mortgages located in Ontario, Quebec, Manitoba. and Sadkatachewan.

Premiums start at 2.4% of the mortgage amount for down payments of 20% or less, going up to 4% for a down payment of 5%. While your mortgage lender will pay the insurance premium, they will usually pass this cost indirectly onto you. However, you may still save money after these premiums through lower mortgage rates that insured mortgages usually have.

To find out how much CMHC insurance would cost for your home, visit our CMHC insurance calculator.

### CMHC Insurance Premiums

Down Payment | CMHC Insurance Premium |
---|---|

5% - 9.99% | 4% |

10% - 14.99% | 3.1% |

15% - 19.99% | 2.8% |

20% - 24.99% | 2.4% |

25% - 34.99% | 1.7% |

Greater than 35% | 0.6% |

### Benefits of CMHC Insurance

Benefits of CMHC Insurance CMHC insurance allows you to make a down payment as low as 5% of the value of the home for homes less than $500,000, or 5% on the first $500,000 and 10% on the remainder for homes over $500,000 and less than $1 million. Since the mortgage is insured, mortgage lenders will often offer lower mortgage rates for insured mortgages.

### Comparing Canadian and U.S. Mortgages

Whether you’re a Canadian snowbird looking to purchase a second home in Florida or you’re planning on moving to the United States, there are differences between Canadian and U.S. mortgages.

### Mortgage Terms

The biggest difference that Canadian borrowers will notice is the difference in mortgage terms. In the U.S., mortgage terms are usually for the entire life of the mortgage. Since U.S. mortgage terms are the same as the mortgage's amortization period, the interest rate will be set for the entire life of the mortgage and will not need to be renegotiated.

Mortgage terms in the U.S. are commonly 30 years, while Canadian amortization periods are usually 25 years. There are adjustable rate mortgages in the U.S. which act as a fixed rate for a certain number of years, and then become a variable rate for the remainder.

### Mortgage Application Process

Cross-border U.S. mortgage applications take a much longer time to process compared to Canadian mortgages. That's because American mortgages require more documentation and verification.

For Canadians looking to get an American mortgage, you'll need to provide documents such as your Canadian tax returns, proof of Canadian citizenship or U.S. visa, Social Insurance Number or U.S. Social Security Number, proof of assets, and insurance documents.

You can use your Canadian assets and equity in your Canadian home, but they'll be converted to U.S. Dollars when being considered in your application.

U.S. mortgage applications take around 45 to 60 days, while Canadian mortgages take around 5 to 10 days to process.

### Tax Deductible Mortgage Interest

Mortgage interest can be tax deductible in the U.S. but that's not the case in Canada. Canadian homeowners can still use a tax strategy to make their mortgage interest tax deductible in Canada by using the Smith Maneuver.

### Mortgage Payment Frequency

Monthly mortgage payments are the most popular option in the U.S., and many lenders do not allow other mortgage payment frequencies. For example, Citibank, US Bank, and TD Bank do not allow bi-weekly mortgage payments. Some lenders that allow biweekly payment plans may charge an additional fee.

### Mortgage Prepayments

Many U.S. mortgage lenders allow you to make additional monthly mortgage payments, but if you’re looking to fully pay off your mortgage, then early mortgage payoffs for U.S. mortgages may come with a mortgage prepayment penalty. However, prepayment penalties are illegal for FHA loans, VA loans, and USDA loans. For lenders that do charge a prepayment penalty, it’s usually only charged if you fully pay off the mortgage within a few years of signing the mortgage loan.

In the United States, mortgage prepayment penalties are only allowed for the first three years of a mortgage loan. The penalty also can't be more than 2% of the mortgage loan balance for the first two years, and the penalty can't be more than 1% in the third year.

There are six states that ban prepayment penalties for all mortgage loans:

- Alabama
- Alaska
- Iowa
- Maryland
- New Mexico
- Vermont

Other states that ban prepayment penalties on certain mortgage loan types, such as those with a high interest rate, subprime, or have a certain balance, include:

- New Jersey
- New York
- Connecticut
- Minnesota
- North Carolina
- South Carolina
- Pennsylvania
- Ohio
- Maine
- Indiana
- Massachusetts

### Differences in Mortgage Defaults

If a borrower is delinquent on their mortgage loan, an U.S. mortgage lender can choose to file a notice of default, which starts the foreclosure process. This notice of default is sent after there are 90 days of missed payments, with foreclosure starting after 180 days.

Foreclosures and power of sales in the United States work similarly to those in Canada. Some states, such as California and Texas, use non-judicial power of sale, while other states, such as New York and Florida, use judicial foreclosures.

Looking at Canada, power of sale is commonly used in Ontario, while foreclosures are more common in British Columbia, Quebec, and Alberta.

U.S. law requires a mortgage loan to be 120 days past due before foreclosure can begin. In Canada, there is no such law that prevents a lender from starting the foreclosure process before a certain number of missed payments. For example, in Alberta, a foreclosure can start as soon as one missed mortgage payment. In Manitoba, foreclosure can start after one month of missed mortgage payments. Canadian foreclosures usually have a set number of months that the borrower can fully repay the due amount in order to prevent the forced sale of their home. This redemption period is usually six months.

The United States also has a federal foreclosure moratorium in 2021 that prevents foreclosures until July 31, 2021.

Power of sale can start earlier than foreclosures in the United States. In California, power of sale can start as soon as after 4 months of missed mortgage payments.

## Total Amount of a Loan Using Excel

Microsoft Excel can be easily used to calculate the total amount of a loan to be repaid. The total amount to be repaid in a loan is a combination of the initial amount borrowed and the total amount of interest to be added, excel can very easily calculate the total amount to be paid using the PMT function. For the PMT function to calculate the entire loan to be repaid three bits of information are required:

rate - The interest rate of the loan expressed as a decimal.

nper - The number of installments.

pv - The amount of the loan.

The calculated value displays the total amount of the loan, not the individual monthly repayments. Always ensure that the rate and nper values are based upon the same units of time eg months, weeks or years.

### Worked Excel Example to Calculate total Loan Amount

Before using the =PMT equation set up an excel work book with the required information - interest rate, amount to be borrowed and number of installments. In the worked example below a loan of 1,000 is required which be paid back over 12 monthly installments at 1.2% monthly interest. For the excel pmt calculation the units are not required and have been added into a separate row for information.

The next stage is to entre the PMS function in the formula bar. The function is:

The three values to be entered are the "rate" (interest rate), "nper" number of installments and "pv" initial amount of the loan. When entering the formula always check for "," between values and ensure the cell references are surrounded by "(...)"

The function returns a value in the cell:

The automatic features of the function assume that the loan will be in dollars and highlights the value in red and places it in brackets. To alter any of these features right click over the cell and click on Format Cells

In the box which opens, the format cell box, the currency and reporting method can be altered.

For a different currency select the appropriate one from the list:

At the reporting style altered:

Click OK to altered the style of the PMT loan calculation.

Related Pages

Reduce Mouse Clicks -

**Excel** - %RSD - Random number - Bullet Points - Adding Line Space - Weather Chart - Joining scatter Points - Centigrade and Fahrenheit Charts - Adding Units to a Function - Add units to a Cell - Loan Amount

**Photoshop -** Black and white images - Gausium Boarder - Home Page**Word** - Format Tables easily - Add tick symbol

Managing personal finances can be a challenge, especially when trying to plan your payments and savings. Excel formulas and budgeting templates can help you calculate the future value of your debts and investments, making it easier to figure out how long it will take for you to reach your goals. Use the following functions:

**PMT**calculates the payment for a loan based on constant payments and a constant interest rate.**NPER**calculates the number of payment periods for an investment based on regular, constant payments and a constant interest rate.**PV**returns the present value of an investment. The present value is the total amount that a series of future payments is worth now.**FV**returns the future value of an investment based on periodic, constant payments and a constant interest rate.

**Figure out the monthly payments to pay off a credit card debt**

Assume that the balance due is $5,400 at a 17% annual interest rate. Nothing else will be purchased on the card while the debt is being paid off.

Using the function PMT(rate,NPER,PV)

**=PMT(17%/12,2*12,5400)**

the result is a monthly payment of $266.99 to pay the debt off in two years.

The rate argument is the interest rate per period for the loan. For example, in this formula the 17% annual interest rate is divided by 12, the number of months in a year.

The NPER argument of 2*12 is the total number of payment periods for the loan.

The PV or present value argument is 5400.

**Figure out monthly mortgage payments**

Imagine a $180,000 home at 5% interest, with a 30-year mortgage.

Using the function PMT(rate,NPER,PV)

**=PMT(5%/12,30*12,180000)**

the result is a monthly payment (not including insurance and taxes) of $966.28.

The rate argument is 5% divided by the 12 months in a year.

The NPER argument is 30*12 for a 30 year mortgage with 12 monthly payments made each year.

The PV argument is 180000 (the present value of the loan).

**Find out how to save each month for a dream vacation**

You’d like to save for a vacation three years from now that will cost $8,500. The annual interest rate for saving is 1.5%.

Using the function PMT(rate,NPER,PV,FV)

**=PMT(1.5%/12,3*12,0,8500)**

to save $8,500 in three years would require a savings of $230.99 each month for three years.

The rate argument is 1.5% divided by 12, the number of months in a year.

The NPER argument is 3*12 for twelve monthly payments over three years.

The PV (present value) is 0 because the account is starting from zero.

The FV (future value) that you want to save is $8,500.

Now imagine that you are saving for an $8,500 vacation over three years, and wonder how much you would need to deposit in your account to keep monthly savings at $175.00 per month. The PV function will calculate how much of a starting deposit will yield a future value.

Using the function PV(rate,NPER,PMT,FV)

**=PV(1.5%/12,3*12,-175,8500)**

an initial deposit of $1,969.62 would be required in order to be able to pay $175.00 per month and end up with $8500 in three years.

The rate argument is 1.5%/12.

The NPER argument is 3*12 (or twelve monthly payments for three years).

The PMT is -175 (you would pay $175 per month).

The FV (future value) is 8500.

**Find out how long it will take to pay off a personal loan**

Imagine that you have a $2,500 personal loan, and have agreed to pay $150 a month at 3% annual interest.

Using the function NPER(rate,PMT,PV)

**=NPER(3%/12,-150,2500)**

it would take 17 months and some days to pay off the loan.

The rate argument is 3%/12 monthly payments per year.

The PMT argument is -150.

The PV (present value) argument is 2500.

**Figure out a down payment**

Say that you’d like to buy a $19,000 car at a 2.9% interest rate over three years. You want to keep the monthly payments at $350 a month, so you need to figure out your down payment. In this formula the result of the PV function is the loan amount, which is then subtracted from the purchase price to get the down payment.

Using the function PV(rate,NPER,PMT)

**=19000-PV(2.9%/12, 3*12,-350)**

the down payment required would be $6,946.48

The $19,000 purchase price is listed first in the formula. The result of the PV function will be subtracted from the purchase price.

The rate argument is 2.9% divided by 12.

The NPER argument is 3*12 (or twelve monthly payments over three years).

The PMT is -350 (you would pay $350 per month).

**See how much your savings will add up to over time**

Starting with $500 in your account, how much will you have in 10 months if you deposit $200 a month at 1.5% interest?

Using the function FV(rate,NPER,PMT,PV)

**=FV(1.5%/12,10,-200,-500)**

in 10 months you would have $2,517.57 in savings.

The rate argument is 1.5%/12.

The NPER argument is 10 (months).

The PMT argument is -200.

The PV (present value) argument is -500.

### 8.1 Calculate the Terms of a Loan

### Learning Objectives

- Evaluate the cost of borrowed money
- Analyze the profitability of a business enterprise
- Explain the benefits of placing multiple graphs on the same page.
- Use fixed costs and variable costs in a break even analysis
- Engage in “What If” data manipulation scenarios to realize business objectives
- Conditionally format data meeting predetermined criteria
- Choose and successfully employ Excel techniques to solve a complex task

### Introduction

Many businesses need a loan in order to cover startup costsThese are fixed costs associated with starting a business. Often refers to one time costs.. Many entrepreneurs will turn to family for a loan. However, the danger here is that you are risking not only your family’s money, but also the relationships if the business should go under.

On the other hand, small businesses without a prior track record sometimes have trouble securing a bank loan. Fortunately, there are government agencies at both the federal and state levels that help businesses secure grants and loans.

Loan payments form part of the fixed costs of a business. Determining the payments on a loan is an important part of forecasting costs. The financial formula that calculates loan payments is fairly complex. However, Excel provides an easier way to calculate loan payments using the payment (PMT) functionA built in Excel function that calculates loan payments. Inputs to the function include the loan amount (pv), the interest rate (rate), and the number of loan payments (nper).. The PMT function is one of many built in Excel functions. In this chapter we will examine functions, how they differ from formulas, and how to use them in a spreadsheet.

### Where Are We in the Life Cycle?

Many information systems projects are conceived of in a life cycle that progresses in stages from analysis to implementation. The diagram below shows the stages that we touch in the current chapter:

### Functions vs. Formulas

In the prior chapter we looked at Excel formulas and how to construct them. In many cases, we want to create our own formulas so we have a clear idea of how the information is constructed.

However, in some cases the formula might involve more complex math where the possibility for error is greater. In these cases it is better to use a built in functionA function is similar to a stored formula. However, functions usually hide details of the formula from the user. For example, we can use the PMT function to calculate loan payments without ever knowing the mathematical formula behind the function. that has already been tested and debugged. There are also functions that avoid busywork that you could do yourself but would probably prefer not to do.

On a small scale this is analogous to the build vs. buy issue. Think of formulas as things that you build whereas functions are things that you “buy.” We put buy in quotes because many functions, including the payment function, are bundled with Excel. That is part of the way that Excel maintains its leadership in the spreadsheet marketplace.

Most functions process input to produce a result. Perhaps the most popular function in Excel is the sum (SUM) functionAlso represented by Σ, the sum function adds up a column or row of numbers., which adds up a long list of numbers. The input for the Sum function are the cells to be added together.

The example below shows the sum function compared with the equivalent formula. The formula is obviously very tedious as it involves adding all the numbers. This is expressed as

=A4+A5+A6+A7+A8+A9+A10+A11+A12The sum function accomplishes the same task more simplistically. This is expressed as

=SUM(A4:A12)Note that in both cases the result is the same: 1,427.

One nice advantage of the sum function is that if we were to add a row in the middle of the list, say between row 7 and row 8, the sum function would automatically expand to accommodate the new row, but the formula would not.

The right way (above) and wrong way (below) to add up a column of numbers. Always try to use the sum function when adding numbers from more than two cells.

### The Payment (PMT) Function Calculates Loan Payments Automatically

The payment (PMT) function calculates loan payments automatically. The format of the PMT function is:

=PMT(rate,nper,pv) correct for YEARLY payments- Rate is the interest rate, usually expressed as an annual percentage rate (APR). If payments are made once a year then just plug in the APR. However, payments are usually once a month. So you need to divide the rate by 12.
- Nper is the number of payment periods. Again, if payments are made once a year then nper is just the number of years of the loan. However, payments are usually once a month. So you need to multiply the nper by 12.
- Pv is the present value of the loan, in other words the loan amount today.

Adjusting for monthly payments produces this modification of the function:

=PMT(rate/12,nper*12,pv) correct for MONTHLY paymentsBy the way, you can use the PMT function to calculate payments on car loans and home mortgages. In case you are curious, the actual mathematical formula that the PMT function translates to looks like this:

Payment = pv* apr/12*(1+apr/12)^(nper*12)/((1+apr/12)^(nper*12)-1)Note that it is hard to even follow a complex mathematical formula when it is written in Excel.

The payment (PMT) function in action. The wording in this illustration is taken directly from U.S. federal guidelines for loan disclosure. The PMT function is used to calculate the monthly payment—in this case $101. The function references three other numbers in the same illustration. Years is multiplied by 12 to get the number of payments (nper), APR% is divided by 12 to get the monthly interest rate, Amount Financed is the present value (pv) of the loan—the amount you are borrowing.

### The Payment (PMT) Function

In the United States, the federal government places requirements on the actual wording of a loan. This wording is reflected in the illustration below. The intention is to force lenders to be honest about the terms of the loan and to allow buyers to comparison shop loans.

Note especially the finance chargeThe total interest paid over the life of the loan. The finance charge is calculated by adding up all of the loan payments and then subtracting from this total the amount originally borrowed. . This number is what people normally understand to be interest on the loan. It is the cost you pay for the privilege of borrowing the money. Now you might be wondering why this number is so high. After all 8% of $5,000 is only $400 not $1,083. The interest compounds or grows because the loan has been stretched out over five years.

First time home buyers are often shocked to find that their finance charge actually exceeds the amount of the loan. In other words, over the life of the loan they end up paying around twice the closing price of the home. Home loans have higher finance charges because they are often stretched out over thirty years—which is a lot of time to compound interest. Similarly, if we were to stretch our $5,000 business loan out over thirty years, the finance charge climbs to $8,208, which exceeds the amount of the loan.

Here the same $5,000 loan is shown under different loan terms. The second loan increases the interest rate to 20%, but leaves all else unchanged from the original. The third loan increases the term of the loan to thirty years but leaves all else unchanged from the original. The lesson here is to borrow at as low an interest rate as possible and for as short a time as possible.

So the bottom line is that you should borrow money for as short a time as possible to avoid large finance charges.

By the way, the situation is even worse with credit card loans because the interest rate on credit cards is so much higher—around 20%. Note how at 20% the finance charge climbs to almost $3,000 over five years. Your goal should be to pay off your credit card in full at the end of each month. If you do not have enough money to do this, then you should try to modify spending habits so that you reach this goal.

### Key Takeaways

- Businesses sometimes need loans to cover startup costs. Ideally, these should be business loans rather than personal loans.
- At its heart, a function is simply a stored formula.
- Functions are pretested and debugged. They sometimes simplify complex mathematical formulas and/or eliminate busywork.
- One disadvantage of functions is that you sometimes lose a sense of how the information was derived.
- The PMT function calculates loan payments. Since most loan payments are monthly, the function needs to be modified by dividing the interest rate by 12, but multiplying the number of payment periods by 12.
- The United States federal government mandates that loan terms be expressed in a uniform way so that buyers are fully informed of credit terms and can comparison shop.
- Because interest is compounded, loans should be taken out for as few years as possible. Compound interest is especially painful at high interest credit card rates.

### Questions and Exercises

- Credit card companies sometimes refer to customers who pay off their balance in full each month as deadbeats. Why would they use such a derogatory term for responsible behavior?
- Do some research and find the terms of a student loan and a car loan. Which has more favorable terms? Explain.

### Techniques

The following techniques, found in the Excel section of the software reference, may be useful in completing the assignments for this chapter: **Conditional Formatting**

### L1 Assignment: Calculate Loan Payments

Create a properly formatted spreadsheet that calculates the payments on a business loan.

Many businesses need to take out loans to cover startup costs. This exercise allows you to create a loan payment calculator and perform a sensitivity analysisAn analysis of how the calculation results vary with changes in the initial assumptions. on the terms of the loan.

Setup

Start Excel and properly title your spreadsheet. Because there are so few numbers the assumptions area and the calculations are combined.

Content and Style

- Name each number in the As-Is scenario. Use those names in calculations.
- Follow best practice design techniques.
- Include a copyright symbol with your name at the bottom.
- Perform a sensitivity analysis to see how payments change as a function of interest rates and loan amount.

Deliverables

Electronic submission: Submit the workbook electronically.

Paper submission:

- The worksheet grid lines will not appear on the printout.
- Print out both the results and formulas. The formulas printout shows the formulas in each column. Reveal the formulas by typing CTRL+ ~. Adjust the column widths to closely crop the formulas by dragging the separator between each column in the gray header area.
- Both printouts should use landscape orientation, which may be accessed from Page Layout > Page Setup > Orientation > Landscape. Each printout should fit on one page. Choose Page Layout > Scale to Fit > Height: 1 page; Width: 1 page.

### L2 Assignment: Include Loan Payments in Forecast

Include loan payments in your previous forecast of revenues and costs.

To make the problem more realistic we bring in loan payments as an additional fixed cost. To help in decision making we conditionally format the sensitivity analysis.

Setup

Open your workbook file from the L2 assignment of the prior chapter, re—save it under a different name, and then modify it to look as below.

Content and Style

- Add an assumption for the Loan Payment.
- Add an assumption for the Desired Profit by Year 5.
- Name each number in the assumptions area.
- Use those names in calculations in the spreadsheet below.
- Follow best practice design techniques in this chapter.
- Only the first number in each column gets formatted as CURRENCY. (Do not format as ACCOUNTING.) Update the format using the Number Formatting Technique. All other numbers greater than 1,000 should be in Comma style.
- Include a copyright symbol with your name at the bottom.
- Produce a sensitivity analysis table of total profit/(loss) as a function of growth rate and price per unit.
- Conditionally format all profit scenarios that meet or exceed the desired minimum profit by year 5 listed in the assumptions area. Conditional formatting is located on the Home screen in Excel. Follow the prompts.

Deliverables

Electronic submission: Submit the workbook electronically.

Paper submission:

- The worksheet grid lines will not appear on the printout.
- Print out both the results and formulas. The formulas printout shows the formulas in each column. Reveal the formulas by typing CTRL+ ~. Adjust the column widths to closely crop the formulas by dragging the separator between each column in the gray header area.
- Both printouts should use landscape orientation, which may be accessed from Page Layout > Page Setup > Orientation > Landscape. Each printout should fit on one page. Choose Page Layout > Scale to Fit > Height: 1 page; Width: 1 page.

Add assumptions and columns as necessary to accommodate loan payments.

## Mortgage Payment Calculator 2021

### Glossary and FAQ

Your mortgage’s payment frequency is how often you will make mortgage payments.

Your mortgage payment frequency can be:

- Monthly
- Semi-monthly
- Bi-weekly
- Weekly

There are also accelerated payment frequency options:

- Accelerated bi-weekly
- Accelerated weekly

### What’s the difference between monthly and bi-weekly payment frequency?

- Monthly mortgage payments are made once per month (12 times per year).
- Bi-weekly mortgage payments are made once every two weeks (26 times per year).

### How many bi-weekly payments are in a year?

There are 26 bi-weekly payments in a year. This is because there are 52 weeks in a year. Since a payment is made every two weeks, 52 weeks divided by 2 means that there will be 26 bi-weekly mortgage payments in a year.

= 26 bi-weekly payments in a year

Another way to look at this is to see how often a bi-weekly payment is made. Bi-weekly payments are made every 14 days. Since there are 365 days in a year, 365 days divided by a payment made every 14 days would give us 26 bi-weekly payments every year.

= 26 bi-weekly payments in a year

### Mortgage Payment Frequency and Payments Per Year

Payment Frequency | Payments Per Year | Equivalent to Monthly Payments per Year |
---|---|---|

Monthly | 12 | 12 Monthly Payments |

Semi-Monthly | 24 | 12 Monthly Payments |

Bi-Weekly | 26 | 12 Monthly Payments |

Accelerated Bi-Weekly | 26 | 13 Monthly Payments |

Weekly | 52 | 12 Monthly Payments |

Accelerated Weekly | 52 | 13 Monthly Payments |

### Are semi-monthly mortgage payments the same as bi-weekly mortgage payments?

Semi-monthly mortgage payments are not the same as bi-weekly mortgage payments.

With a semi-monthly mortgage payment, your mortgage payment will be made two times per month. For example, you might make a payment on the 1st of the month, and another payment on the 15th of the month.

Semi-monthly mortgage payments split every month into two. This makes two payments every month. With 12 months in a year, you'll be making 24 semi-monthly mortgage payments every year. You’ll simply divide a regular monthly mortgage payment into **formula to calculate mortgage payment excel** payments do not split months into two. Instead, bi-weekly mortgage payments are made every two weeks, which is considered to be every 14 days. While two bi-weekly payments will be made for 28 days, a month has either 30 days or 31 days, except for February. Over a year, this means that you’ll be making 26 bi-weekly mortgage payments, to account for there being 52 weeks in a year.

Bi-weekly mortgage payments have two extra payments every year, equivalent to one month of mortgage payments, over t mobile one military plan amount of payments for a monthly or semi-monthly mortgage payment.

### Accelerated Mortgage Payments

Accelerated bi-weekly and accelerated weekly mortgage payments also gives you the equivalent of an extra monthly mortgage payment every year, but it’s different from non-accelerated bi-weekly and weekly payments in that the mortgage payment amount is not reduced.

### Non-Accelerated Mortgage Payments

Non-accelerated bi-weekly and weekly mortgage payments are based on what a monthly mortgage payment would have been. For non-accelerated bi-weekly, you would calculate the payment by taking the monthly mortgage payment, multiplying it by 12 to get the amount to be paid every year, and then simply dividing it by 26 bi-weekly payments. You’ll still be paying the same total amount every year as you would with a monthly mortgage payment. You’ll simply be paying it over two extra payments, which means each non-accelerated bi-weekly payment is smaller.

The good morning america com thing happens with non-accelerated weekly mortgage payments. To calculate it, you'll also multiply the monthly mortgage payment by 12 to get the amount that you'll need to pay per year, and then divide it by 52 weeks. A weekly payment is made every 7 days, and it being non-accelerated means that you will still be paying the equivalent amount of a monthly mortgage payment, just over smaller individual payments.

### How Accelerated Mortgage Payments Work

Accelerated mortgage payments are the payment frequency options that will allow you to pay off your mortgage faster and save you potentially thousands in mortgage interest costs.

With accelerated bi-weekly payments, you'll still make a payment every 14 days (two weeks), which adds up to 26 bi-weekly payments in a year. The part that makes it accelerated is that instead of calculating how much an equivalent monthly mortgage payment would add up to in a year, and then simply dividing it by 26 bi-weekly payments, accelerated bi-weekly payments does the opposite.

To find your accelerated bi-weekly payment amount, you'll divide the monthly mortgage payment by two. Note that there are 12 monthly payments in a year, but bi-weekly payments are equivalent to 13 monthly payments. By not adjusting for the extra monthly payment by taking the total annual amount of a monthly payment frequency, an accelerated bi-weekly frequency gives you an extra monthly payment every year. This pays off your mortgage faster, and shortens your amortization period.

The same calculation is used for accelerated weekly payments. To find your accelerated weekly payment amount, you'll divide a monthly mortgage payment by four.

### Paying Your Mortgage Weekly vs. Monthly

There isn't a large difference between paying your mortgage weekly or monthly, if we're looking at non-accelerated weekly payments. That's because the total amount paid per year is the exact same for both payment frequencies. You'll just pay a smaller amount with a weekly payment, but you'll be making more frequent payments. The real difference is when you choose accelerated weekly payments. Accelerated payments can shave years off of your amortization, and can save you thousands of dollars.

### Which payment schedule is right for me?

While it will depend on your specific situation, here are some general guidelines:

- Most people choose to synchronize their mortgage payments with their monthly or bi-weekly paycheck. This will make it easier to budget.
- More frequent mortgage payments will slightly lower your term and lifetime mortgage cost. Accelerated payment frequencies are also available.

### Mortgage Payment Frequency Example

Let's compare mortgage payment frequencies by looking at a $500,000 mortgage in Ontario with a 25-year amortization, and assume that it has a fixed mortgage rate of 1.5% for a 5-year term.

The monthly mortgage payment would be $2,000. Now, let’s see how much it would be with semi-monthly, bi-weekly, and weekly mortgage payments.

### Comparing a $2,000 Monthly Payment Frequency

Payment Frequency | Payment Formula | Number of Payments per Year | Mortgage Payment Amount | Total Mortgage Payments per Year |
---|---|---|---|---|

Monthly | 12 | $2,000 | $24,000 | |

Semi-Monthly | 24 | $1,000 | $24,000 | |

Bi-Weekly | 26 | $923 | $24,000 | |

Weekly | 52 | $461 | $24,000 | |

Accelerated Bi-Weekly | 26 | $1,000 | $26,000 | |

Accelerated Weekly | 52 | $500 | $26,000 |

Monthly, semi-monthly, bi-weekly, and weekly all add up to the same **formula to calculate mortgage payment excel** paid per year, at $24,000 per year. For accelerated payments, you’re paying an extra $2,000 per year, equivalent to an extra monthly mortgage payment. This extra mortgage payment will pay down your mortgage principal faster, meaning that you’ll be able to pay off your mortgage quicker.

This mortgage calculator allows you to choose between monthly and bi-weekly mortgage payments. Selecting between them lets you easily compare how it can affect your mortgage payment, and the amortization schedule below the Canada mortgage calculator will also ordering checks pnc bank the payment frequency.

The **down payment** is the amount you will pay upfront to obtain a mortgage. The skeleton key in hindi download a larger down payment will reduce the amount that you will need to borrow, which means that your mortgage payments will be smaller.

The down payment that you enter into the mortgage calculator will affect the beginning balance of your mortgage. If you mycdh optum login a down payment that is less than 20%, then the mortgage payment calculator will include the cost of CMHC insurance premiums into your mortgage by adding it to your principal balance.

### What’s my minimum down payment?

Your minimum down payment depends on the purchase price of your property.

- If your purchase price is under $500,000, your minimum down payment is 5% of the purchase price.
- If your purchase price is $500,000 to $999,999, your minimum down payment is 5% of the first $500,000, plus 10% of the remaining portion.
- If your purchase price is $1,000,000 or more, your minimum down payment is 20% of the purchase price.

If you’re self-employed or have poor credit, your lender may require a higher down payment.

### Are there additional costs or restrictions associated with small down payments?

Yes. If your down payment is below 20% of the purchase price,

- you will be required to purchase mortgage default insurance, and
- your amortization period cannot exceed 25 years.

For more information, see the section on CMHC insurance below.

### What is a high-ratio mortgage?

A mortgage with a down payment below 20% is known as a high-ratio mortgage mortgage. The term ratio refers to the size of your mortgage loan amount as a percentage of your total purchase price. All high-ratio mortgages require the purchase of CMHC insurance, since they generally carry a higher risk of default.

Your mortgage’s amortization period is the length of time that it will take to pay off your mortgage. A shorter amortization period means that your mortgage will be paid off faster, but your mortgage payments will be larger. Having a longer amortization period means that your mortgage payments will be smaller, but you’ll be paying more in interest.

In the mortgage calculator above, you can enter any amortization period ranging from 1 year to as long as 30 years. Some mortgages in Canada, such as commercial mortgages, allow an amortization of up to 40 years.

### What amortization period should I choose?

Here are some general guidelines for choosing an amortization period for your mortgage:

- Most mortgages in Canada have an amortization period of 25 years. Unless you require a longer amortization period due to cash flow concerns, or you can afford to shorten your amortization, a 25 year amortization works well in most cases.
- Choosing a shorter amortization means that you’ll be paying off your mortgage principal balance faster. This will lower your lifetime interest cost, but it will city bank lubbock texas phone number result in a higher monthly or bi-weekly mortgage payment.
- Insured high-ratio mortgages cannot have an amortization that is over 25 years. If you choose an amortization period of over 25 years, you must make at least 20% down payment.

The term of your mortgage is the length of time that your mortgage contract is valid for. Your mortgage contract includes your mortgage interest rate for the term. At the end of your mortgage term, your mortgage expires. You will need to renew your mortgage for another term or fully pay it off. Your mortgage interest rate will most likely change at renewal.

This mortgage calculator uses the most popular mortgage terms in Canada: the one-year, two-year, three-year, four-year, five-year, and seven-year mortgage terms.

### What term should I choose?

The most common term length in Canada is 5 years, and it generally works well for most borrowers. Lenders will have many different options for term lengths for you to choose from, with mortgage rates varying based on the term length. Longer terms commonly have a higher mortgage rate, while shorter terms have lower mortgage rates.

### What happens at the end of a term?

You will need to either renew or refinance your mortgage at the end of each term, unless you are able to fully pay off your mortgage.

- Renewing your mortgage means that you will be signing another mortgage term, and it may have a different mortgage interest rate and monthly payment. Mortgage renewals are done with the same lender.
- Refinancing your mortgage means that you will also be signing another mortgage term, but you’ll also be signing a new mortgage agreement. This allows you to switch to another lender, increase your loan amount, and sign another term before your current term is over. This lets you take advantage of lower rates from another lender, borrow more money, and lock-in a mortgage rate early.

Your mortgage’s interest rate is shown as an annual rate, and it determines how much interest you will pay based on your mortgage’s principal balance.

You’re able to select between variable and fixed mortgage rates in the mortgage calculator above. Changing your mortgage rate type will change the mortgage terms available to you.

### How does the interest rate affect the cost of my mortgage?

Your regular mortgage payments include both principal payments and interest payments. Having a higher interest rate will increase the amount of interest that you will pay on your mortgage. This increases your regular mortgage payments, and makes your mortgage more expensive by increasing its total cost. On the other hand, having a lower mortgage interest rate will reduce your cost of borrowing, which can save you thousands of dollars.

### What’s the difference between a fixed and variable rate?

- A fixed interest rate is guaranteed to remain unchanged for the length of your mortgage term.
- A variable interest rate can change during your mortgage term. This will not affect your mortgage payment for the duration of the term, but adjusts what percentage of your payment goes to paying off first national bank severna park mortgage principal.

### What controls a variable interest rate?

Variable amazon return tracking rates change based on your lender’s prime rate, which is controlled by your lender. If your lender increases their prime rate, then your variable interest rate will increase.

Lender’s will usually only change prime rates to match movements in the Bank of Canada’s policy interest rate. If the lender’s funding cost increases, such as through the Bank of Canada increasing their policy rate, then the lender will in turn increase variable mortgage rates. Prime rates are generally similar or identical between different lenders, with all Canadian banks currently having a prime rate of 2.45% as of July 2021.

Your variable mortgage rate is priced at a discount or a premium to your lender’s prime rate.

### Should I choose a fixed or variable rate?

A variable rate lets you benefit from decreases in market interest rates, but it will cost you more if interest rates rise. Fixed rates are a better chef jose andres hurricane maria if interest rates will rise in the future, but it can lock you in at a higher rate if rates fall in the future.

Of course, it’s not possible to exactly predict future interest rates, but a 2001 study found that variable interest rates outperform fixed interest rates up to 90% of the time between 1950 and 2000. If you’re comfortable with taking on risk, a variable mortgage rate can result in a lower lifetime mortgage cost.

### Skip a Mortgage Payment

Many mortgage lenders offer flexible mortgage payment options, such as the ability to skip a payment or to defer your mortgage payments. Most of Canada’s major banks allow you to skip a mortgage payment, with the exception of CIBC and National Bank.

Generally, you won't be able to skip mortgage payments for mortgages that are insured. Having a CMHC-insured mortgage means that your amortization cannot go over 25 years. For insured mortgages, you'll need to have made a mortgage prepayment that would be equivalent to the amount that you want to skip for you to be able to skip a mortgage payment in the future.

Lenders also have conditions in order to be able to skip a mortgage payment. Your mortgage must not be in arrears, and your current mortgage balance must not be more than your original mortgage balance at the start of your term.

### What Happens If You Skip a Payment?

Skipping a mortgage payment doesn't mean that the lender is giving it to you for free. Skipping a payment just means that you'll be paying it back later. When you skip a mortgage payment, interest that would have been charged would be added to your mortgage balance instead of being paid off. This increases your mortgage balance, which means that you'll be paying interest on your added interest.

If you don’t repay the skipped mortgage amount plus accumulated interest, then you’ll be paying interest on the interest for the rest of your mortgage’s amortization. This could make skipping a mortgage payment a very costly option to take. Fortunately, many lenders allow you to repay your skipped payments without any prepayment penalties.

### How Often Can I Skip Mortgage Payments?

Lender | How Often? |
---|---|

RBC | Once Every 12 Months Or If Prepayments Were Made |

TD | Once Every Calendar Year Or Up to Four Months if Prepayments Were Made |

BMO | Up to Four Months Every Calendar Year |

Scotiabank | If Prepayments Were Made |

CIBC | Never |

National Bank | Never |

RBC allows you to skip one month's worth of mortgage payments once every 12 months. If your mortgage payment frequency is not monthly, then they will need to be skipped consecutively. For example, if you have bi-weekly or semi-monthly payments, then you will be able to skip two consecutive mortgage service credit union branches near me every 12 months. For weekly payments, you'll be able to skip four consecutive weekly payments.

If you have made extra mortgage payments in the same term, you'll be able to skip an equivalent amount of mortgage payments. For example, if you've made two double-up payments, equivalent to two extra monthly payments, then you'll be able to skip two months' worth of mortgage payments.

TD lets you skip a monthly payment, or the equivalent of a monthly payment, once every calendar year. TD only allows you to skip a monthly payment four times throughout the life of your mortgage. For example, if your TD mortgage has an amortization period of 25 years, you won't be able to skip payments more than four times with TD over sasha banks and husband 25 years.

TD lets you prepay in advance to skip more payments if needed. This "payment vacation" is allowed for up to four months at a time. For example, you've made four months worth of mortgage prepayments towards your TD mortgage. You'll now be able to skip four months of mortgage payments.

BMO lets you skip one months worth of mortgage payments every calendar year. BMO also has a Family Care Option that allows borrowers to skip four mortgage payments per calendar year to take care of your family, such as caring for a new baby or a sick family member.

Self-employed mortgage borrowers are not able to use BMO's Family Care Option. Borrowers that are receiving mortgage disability benefits from their mortgage insurance are also not able to skip mortgage payments.

Scotiabank’s Miss-a-Payment lets you skip mortgage payments if you have already prepaid an equivalent amount. This could be by making a lump-sum mortgage prepayment, by increasing your regular mortgage payments, or by matching a payment.

### Mortgage Prepayments

Prepaying your mortgage allows you to directly pay down your mortgage principal balance, allowing you to be mortgage-free sooner. Banks and mortgage lenders have limits on the amount of mortgage prepayments that you can pay per year for closed mortgages without being charged prepayment penalties. If you have an open mortgage, you won’t have any prepayment limit or charges.

### How Much Mortgage Prepayments Can I Make?

Lender | Annual Limit (% of original mortgage amount) |
---|---|

RBC | 10% |

Scotiabank | 15% |

TD | 15% |

BMO | 20% |

CIBC | 10% for Fixed Mortgages 20% for Variable Mortgage |

National Bank | 10% |

### Does Mortgage Payments Include Property Tax?

Many mortgage lenders require you to pay property taxes through your lender in your regular mortgage payment, with your lender then paying how to activate walmart prepaid debit card municipality. This is because failing to pay your property taxes can lead to your municipality placing a lien on your property, which will be placed in the front-of-the-line before your lender's claim on your home.

If you pay your property taxes through your lender, then your lender will estimate an amount that would need to be paid every month in order to cover the total amount of property taxes for the entire year. If the amount that the lender collected is not enough to cover the actual property tax due, then the lender will advance the due amounts to the municipality and charge you for the shortfall.

Your lender may charge you interest on the amount of any shortfall. The lender may pay you interest if you have overpaid and have a surplus. Property tax bills or property tax notices are required to be sent to your lender, as failing to send it may mean the collected property tax amounts are not accurate.

If your lender pays property tax on your behalf and adds the cost to your mortgage payments, then you will still receive a copy of your municipality's property tax bill, or a mortgage tax bill. Mortgage deferrals or using an option to skip a mortgage payment doesn’t mean that you get to skip your property tax payment or mortgage life insurance premiums too. You will still need to pay your property taxes and insurance premiums, as skipping a mortgage payment only skips the interest and principal payment.

Some lenders allow you to pay property taxes on your own. However, they have the right to ask you to provide evidence that you have paid your property tax.

If paying property taxes on your own, your municipality may have different property tax due dates. Property tax might be paid one a year, or in installments through a tax payment plan. Installments might be monthly or semi-annually.

### What happens if I have a late mortgage payment?

Missing a mortgage payment, whether you forgot to make a payment, you had insufficient funds in your account, or for other reasons, is something that can happen. A mortgage payment is considered to be late if it's not paid on the date that it is due.

Missing a mortgage payment means that you need to catch-up by making a double payment the next month. Otherwise, you will be one month behind on your mortgage payments and have them all considered to be late.

Your lender will try to contact you if you miss a mortgage payment. They will let you know how your missed payment can be made, such as taking the payment before the next payment due date or doubling the payment at the next payment date.

Depending on your mortgage contract, you might be charged a late payment fee or a non-sufficient funds (NSF) fee.

As long as your mortgage payment hasn't been late for a long period of time, and you pay back the missed payment promptly, then your lender may not report it to the credit bureaus. Even so, missing your mortgage payment by one day is still enough to have it considered to be a late payment. If you miss multiple mortgage payments, your lender can report it, which will negatively affect your credit score and will stay on your credit report for up to six years.

While your mortgage lender might offer features such as being able to skip a mortgage payment or mortgage payment deferrals, you have to select to use this feature beforehand. You cannot simply miss a payment and choose to have a skip-a-payment feature applied retroactively.

These requests also take a few days to be processed. If it's within a few days of your payment date, then your current payment might be processed and only your next payment will be skipped. Lenders will also not allow you to use skip-a-payment options if your mortgage payments are in arrears.

### What are mortgage statements?

A mortgage statement outlines important information about your mortgage. Mortgage statements are usually an annual statement, with it being sent out by mail between January and March rather than once every month. You may also choose to receive your mortgage statement online.

For example, TD only produces mortgage statements annually in January, while CIBC produces them between January and March. If you have an annual mortgage statement, it will usually be dated December 31. You may also request a mortgage statement to be sent.

Information on a mortgage statement are up to the end of your statement period and include:

- Current interest rate
- Principal balance
- Mortgage payment amount
- Total of mortgage payments made
- Remaining amortization
- Property tax payment
- Mortgage life insurance or mortgage creditor insurance premiums

### Mortgage Insurance vs. Life Insurance

Mortgage life insurance is an optional insurance policy that you can purchase from your mortgage lender that protects your mortgage balance. If you pass away, a death benefit will be paid to your mortgage lender to pay off some or all of the mortgage balance. If you get a critical illness, disability, or lose a job, you’ll receive a payout that helps cover some or all of your monthly mortgage payments. In all of these cases, your lender is the one that receives the insurance payouts.

With life insurance, you’re purchasing a policy with a beneficiary that you get to choose. You can also choose to purchase a policy with a certain payout benefit, rather than having it tied to the balance of your mortgage.

Mortgage life insurance premiums are based on the borrower’s age and the balance of their mortgage. Premiums are charged as a certain rate per $1,000 of mortgage balance. Mortgage life insurance in Canada is completely optional. A lender can’t force you to purchase mortgage life insurance, no matter your down payment. However, if you make a down payment less than 20%, your lender can require you to purchase mortgage default insurance.

Mortgage life insurance can be easier to obtain, but having a potential insurance benefit that gradually decreases as you make mortgage payments means that the benefit gets smaller while your insurance premiums stay the same.

### Can I Cancel My Mortgage Life Insurance?

Canada’s major banks all allow you to cancel your mortgage life insurance at any time, and to receive a refund if you cancel your plan within the first 30 days. This 30-day free look or 30-day review period is important as it lets you change your mind should you decide that mortgage life insurance isn't right for you.

To cancel, you can call your lender's insurance helpline, complete a form at a branch, or send a written request by mail.

### What is mortgage insurance?

Mortgages with a down payment of less than 20% are required to be insured due to the higher level of risk that they carry. This insurance protects the mortgage lender should you default on the mortgage. Mortgage default insurance does not protect you or help you cover mortgage payments.

The largest provider of mortgage loan insurance in Canada is the Canada Mortgage and Housing Corporation (CMHC), which is owned by the Government of Canada. Some mortgage lenders allow you to go through a private mortgage insurer instead, such as Canada Guaranty or Sagen.

### Is mortgage insurance mandatory?

Mortgage default insurance is required for mortgages with a down payment of less than 20% at a federally-regulated mortgage lender, such as at a bank. If you make a down payment that is 20% or larger, then you will not need to get an insured mortgage. Mortgage default insurance premiums are added as a one-time lump-sum onto your mortgage balance at closing, which means that you’ll be paying for it in your mortgage payments over the life of your mortgage.

Unregulated lenders, such as private mortgage lenders, may allow you to get an uninsured mortgage with a down payment that is less than 20%.

### What mortgages does CMHC insurance not cover?

The CMHC has eligibility requirements that limit the type of mortgages that can be insured.

CMHC insurance will not cover homes with a cost of $1 million or more.

Mortgages with an amortization period greater than 25 years are also not eligible for CMHC insurance.

You can still get CMHC insurance for mortgages with a down payment larger than 20%.

### How much is CMHC insurance?

CMHC insurance premiums are a percentage of your mortgage and are paid by your mortgage lender. Provincial sales tax is added to premiums for mortgages located in Ontario, Quebec, Manitoba. and Sadkatachewan.

Premiums start at 2.4% of the mortgage amount for down payments of 20% or less, going up to 4% for a down payment of 5%. While your mortgage lender will pay the insurance premium, they will usually pass this cost indirectly onto you. However, you may still save money after these premiums through lower mortgage rates that insured mortgages usually have.

To find out how much CMHC insurance would cost for your home, visit our CMHC insurance calculator.

### CMHC Insurance Premiums

Down Payment | CMHC Insurance Premium |
---|---|

5% - 9.99% | 4% |

10% - 14.99% | 3.1% |

15% - 19.99% | 2.8% |

20% - 24.99% | 2.4% |

25% - 34.99% | 1.7% |

Greater than 35% | 0.6% |

### Benefits of CMHC Insurance

Benefits of CMHC Insurance CMHC insurance allows you to make a down payment as low as 5% of the value of the home for homes less than $500,000, or 5% on the first $500,000 and 10% service credit union branches near me the remainder for homes over $500,000 and less than $1 million. Since the mortgage is insured, mortgage lenders will often offer lower mortgage rates for insured mortgages.

### Comparing Canadian and U.S. Mortgages

Whether you’re a Canadian snowbird looking to purchase a second home in Florida or you’re planning on moving to the United States, there are differences between Canadian and U.S. mortgages.

### Mortgage Terms

The biggest difference that Canadian borrowers will notice is the difference in mortgage terms. In the U.S., mortgage terms are usually for the entire life of the mortgage. Since U.S. mortgage terms are the same as the mortgage's amortization period, the interest rate will be set for the entire life of the mortgage and will not need to be renegotiated.

Mortgage terms in the U.S. are commonly 30 years, while Canadian amortization periods are usually 25 years. There are adjustable rate mortgages in the U.S. which act as a fixed rate for a *formula to calculate mortgage payment excel* number of years, and then become a variable rate for the remainder.

### Mortgage Application Process

Cross-border U.S. mortgage applications take a much longer time to process compared to Canadian mortgages. That's because American mortgages require more documentation and verification.

For Canadians looking to get an American mortgage, you'll need to provide documents such as your Canadian tax returns, proof of Canadian citizenship or U.S. visa, Social Insurance Number or U.S. Social Security Number, proof of assets, and insurance documents.

You can use your Canadian assets and equity in your Canadian home, but they'll be converted to U.S. Dollars when being considered in your application.

U.S. mortgage applications take around 45 to 60 days, while Canadian mortgages take around 5 to 10 days to process.

### Tax Deductible Mortgage Interest

Mortgage interest can be tax deductible in the U.S. but that's not the case in Canada. Canadian homeowners can still use a tax strategy to make their mortgage interest tax deductible in Canada by using the Smith Maneuver.

### Mortgage Payment Frequency

Monthly mortgage payments are the most popular option in the U.S., and many lenders do not allow other mortgage payment frequencies. For example, Citibank, US Bank, and TD Bank do not allow bi-weekly mortgage payments. Some lenders that allow biweekly payment plans may charge an additional fee.

### Mortgage Prepayments

Many U.S. mortgage lenders allow you to make additional monthly mortgage payments, but if you’re looking to fully pay off your mortgage, then early mortgage payoffs for U.S. mortgages may come with a mortgage prepayment penalty. However, prepayment penalties are illegal for FHA loans, VA loans, and USDA loans. For lenders that do charge a prepayment penalty, it’s usually only charged if you fully pay off the mortgage within a few years of signing the mortgage loan.

In the United States, mortgage prepayment penalties are only allowed for the first three years of a mortgage loan. The penalty also can't be more than 2% of the mortgage loan balance for the first two years, and the penalty can't be more than 1% in the third year.

There are six states that ban prepayment penalties for all mortgage loans:

- Alabama
- Alaska
- Iowa
- Maryland
- New Mexico
- Vermont

Other states that ban prepayment penalties on certain mortgage loan types, such as those with a high interest rate, subprime, or have a certain balance, include:

- New Jersey
- New York
- Connecticut
- Minnesota
- North Carolina
- South Carolina
- Pennsylvania
- Ohio
- Maine
- Indiana
- Massachusetts

### Differences in Mortgage Defaults

If a borrower is delinquent on their mortgage loan, an U.S. mortgage lender can choose to file a notice of default, which starts the foreclosure process. This notice of default is sent after there are 90 days of missed payments, with foreclosure starting hotels near university at buffalo 180 days.

Foreclosures and power of sales in the United States work similarly to those in Canada. Some states, such as California and Texas, use non-judicial power of sale, while other states, such as New York and Florida, use judicial foreclosures.

Looking at Canada, power of sale is commonly used in Ontario, while foreclosures are more common in British Columbia, Quebec, and Alberta.

U.S. law requires a mortgage loan to be 120 days past due before foreclosure can begin. In Canada, there is no such law that prevents a lender from starting the foreclosure process before a certain number of missed payments. For example, in Alberta, a foreclosure can start as soon as one missed mortgage payment. In Manitoba, foreclosure can start after one month of missed mortgage payments. Canadian foreclosures usually have a set number of months that the borrower can fully repay the due amount in order to prevent the forced sale of their home. This redemption period is usually six months.

The United States also has a federal foreclosure moratorium in 2021 that prevents foreclosures until July 31, 2021.

Power of sale can start earlier than foreclosures in the United States. In California, power of sale can start as soon as after 4 months of missed mortgage payments.

## Mortgage Payoff Calculator

### Planning to Pay Off Your Mortgage Early?

Use the "Extra payments" functionality to find out how you can shorten your loan term and save money on interest by paying extra toward your loan's principal each month, every year, or in a one-time payment.

### Understand Your Mortgage Payment

Your *mortgage payment* is defined as your principal and interest payment in this mortgage payoff calculator. When you pay extra on your principal balance, you reduce the amount of your loan and save money on interest.

Keep in mind that you may pay for other costs in your monthly payment, such as homeowners’ insurance, property taxes, and private mortgage insurance (PMI). For a breakdown of your mortgage payment costs, try our free mortgage calculator.

### Accelerate Your Mortgage Payment Plan

Get creative and find more ways to *formula to calculate mortgage payment excel* additional payments on your mortgage loan. Making extra payments on the principal balance of your mortgage will help you pay off your mortgage debt faster and save thousands of dollars in interest. Use our free budgeting tool, EveryDollar, to see how extra mortgage payments fit into your budget.

### Calculate Different Scenarios

See how early you’ll pay off your mortgage and how much interest you’ll save.

Let’s say your remaining balance on your home is $200,000. Your current principal and interest payment is bank of eastman magnolia state bank every month on a 30-year fixed-rate loan. You decide to make an additional $300 payment toward principal every month to pay off your home faster. By adding $300 to your monthly payment, you’ll save just over $64,000 in interest and pay off your home over 11 years sooner.

Consider another example. You have a remaining balance of $350,000 on your current home on a 30-year fixed rate mortgage. You decide to increase your monthly payment by $1,000. With that additional principal payment every month, you could pay off your home nearly 16 years faster and save almost $156,000 in interest.

## Total Amount of a Loan Using Excel

Microsoft Excel can be easily used to calculate the total amount of a loan to be repaid. The total amount to be repaid in a loan is a combination of the initial amount borrowed and the total amount of interest to be added, excel can very easily calculate the total amount to be paid using the PMT function. For the PMT function to calculate the entire loan to be repaid three bits of information are required:

rate - The interest rate of the loan expressed as a decimal.

nper - The number of installments.

pv - The amount of the loan.

The calculated value displays the total amount of the loan, not the individual monthly repayments. Always ensure that the rate and nper values are based upon the same units of time eg months, weeks or years.

### Worked Excel Example to Calculate total Loan Amount

Before using the =PMT equation set up an excel work book with the required information - interest rate, amount to be borrowed and number of formula to calculate mortgage payment excel. In the worked example below a loan of 1,000 is required which be paid back over 12 monthly installments at 1.2% monthly interest. For the excel pmt calculation the units are not required and have been added into a separate row for information.

The next stage is to entre the PMS function in the formula bar. The function is:

The three values to be entered are the "rate" (interest rate), "nper" number of installments and "pv" initial amount of the nyseg pay my bill. When entering the formula always check for "," between values and ensure the cell references are surrounded by "(.)"

The function returns a value in the cell:

The automatic features of the function chase bank account customer service that the loan will be in dollars and highlights the value in red and places it in brackets. To alter any of these features right country code for phone usa over the cell and click on Format Cells

In the box which opens, the format cell box, the currency and reporting method can be altered.

For a different currency select the appropriate one from the list:

At the reporting style altered:

Click OK to altered the style of the PMT loan calculation.

Related Pages

Reduce Mouse Clicks -

**Excel** - %RSD - Random number - Bullet Points - Adding Line Space - Weather Chart - Joining scatter Points - Centigrade and Fahrenheit Charts - Adding Units to a Function - Add units to a Cell - Loan Amount

**Photoshop -** Black and white images - Gausium Boarder - Home Page**Word** - Format Tables easily - Add tick symbol

## Mortgage APR Calculator

### Using the Mortgage APR Calculator

Here's how it works:

- Enter how much you wish to borrow in the "Mortgage Amount" box. Note that you can use the sliders to adjust this amount if you want to see results for a range of figures.
- Enter the length of the loan and the interest rate you expect to pay in the boxes indicated.
- At this point, the Mortgage APR Calculator will show the monthly payment for the loan amount, term and interest rate you have entered.
- Choose "Annually" or "Monthly" for "Report Amortization." This will not affect your results on this page but will determine how your amortization schedule will be shown on the following page, after you click "Show Report" at the top of the page.
- Click "Closing Costs" to expand that section if it is not already visible. Note that you can display or hide different sections of the calculator by clicking the " " or "–" figures at right.
- Enter the percentage of your loan that will be charged as an origination fee (if applicable). Note that you can manually enter a decimal amount if your fee is not whole percent.
- If you plan to pay for discount points, enter the number of points you plan to buy here. Note that you can enter negative points, which are used when the lender is covering some costs in return for a higher rate.
- Enter the total of all other fees you will be paying on the loan.

Your mortgage APR will automatically display and be updated by the calculator as you enter or change information. The "Total Payments" chart will show your total interest and principle costs foreclosed homes for sale raleigh nc the life of the loan, while "Principle Balance by Year" will chart the gradual decline of loan principle as you pay the loan off over the term of the loan.

Clicking "View Report" at the top of this page will take you to another page that will explain how your APR figure was arrived at for the loan information you entered. It will also display a payment schedule/amortization table showing how your principle and interest payments will change over the term of the loan, and your accumulated interest and principle payments over time. This will be shown in yearly or monthly increments, depending on the choice you made under "Report Amortization" at #4, above.

**FAQ: Formula to calculate mortgage payment excel is a valuable tool for comparing lenders and deciding on length of loan, costs and loan program that works best for you.**

### Using APR to shop for a mortgage

As noted above, APR provides a more accurate indication of the true cost of a mortgage than simply looking at the mortgage rate. In some cases, mortgage lenders may charge higher fees to offset an unusually low rate they may be offering. APR can help you detect that.

By law, the APR must be disclosed in any loan estimate, including mortgages, and in any advertising for loans that specifies an interest rate. Such advertising for mortgage rates must also include the number of discount points the rate is based on, the more discount points that are included, the larger the difference there will be between the rate and the mortgage APR.

While mortgage APR is a useful guide for comparing the costs of different loan offers, it does have some shortcomings. Because it is based on annualized cost of fees amortized over the full length of the loan, it will not give a fully accurate picture of costs if you sell or refinance before the loan is paid off.

As a rule of thumb, it's often better to accept higher fees in return for a lower rate on a long-term loan, where you have more time to amortize their cost. But if you're only going to have the loan for a few years, it's often better to minimize fees even if you're paying a higher rate.

**FAQ: Our Mortgage APR is for fixed rate loans and does not give an accurate comparison of the costs on adjustable-rate mortgages (ARMs), because it cannot anticipate how the rate on the loan may change over time, and does not take into account factors such as the frequency of rate changes and limits on how much rates may be adjusted, which vary from loan to loan.**

**FAQ: See FAQ above under section “Mortgage Loan APR Explained” for APR’s on an Adjustable Rate Mortgage (ARM).**

### Why use an APR Mortgage Calculator?

Your lender will figure your APR for you, and will advertise it in loan offers. However, you may wish to see yourself how the APR will vary if you make certain changes in the loan, such as buying more or fewer points. Or you may want to compare loan offers from lenders with different fee schedules and want to see how different fee schedules affect the APR and total cost of the loan.

**FAQ: It is also helpful if you: Are working with a tight budget and need to know exactly how much you can afford.**

**FAQ: You want to compare the true total monthly payment required from two or more providers. For the best way to do this, ****click Get FREE Quote**** (at the top of this page).**

## Mortgage calculator

**Mortgage calculators** are automated tools that enable users to determine the financial implications of changes in one or more variables in a mortgage financing arrangement. Mortgage calculators are used by consumers to determine monthly repayments, and by mortgage providers to determine the financial suitability of a home loan applicant.^{[1]} Mortgage calculators are frequently on for-profit websites, though the Consumer Financial Protection Bureau has launched its own public mortgage calculator.^{[2]}^{: 1267, 1281–83 }

The major variables in a mortgage calculation include loan principal, balance, periodic compound interest rate, number of payments per year, total number of payments and the regular payment amount. More complex calculators can take into account other costs associated with a mortgage, such as local and state taxes, and insurance.

Mortgage calculation capabilities can be found on financial handheld calculators such as the HP-12C or Texas InstrumentsTI BA II Plus. There are also multiple free online free mortgage calculators, and software programs offering financial and mortgage calculations.

### Uses[edit]

When purchasing a new home, most buyers choose to finance a portion of the purchase price via the use of a mortgage. Prior to the wide availability of mortgage calculators, those wishing to understand the financial implications of changes to the five main variables in a mortgage transaction were forced to use compound interest rate tables. These tables generally required a working understanding of compound interest mathematics for proper use. In contrast, mortgage what is the routing number for first interstate bank make answers to questions regarding the impact of changes in mortgage variables available to everyone.

Mortgage calculators can be used to answer such questions as:

If one borrows $250,000 at a 7% annual interest rate and pays the loan back over thirty years, with $3,000 annual property tax payment, $1,500 annual property insurance cost and 0.5% annual private mortgage insurance payment, what will the monthly payment be? The answer is $2,142.42.

A potential borrower can use an online mortgage calculator to see how much property he or she can afford. A lender will compare the person's total monthly income and total monthly debt load. A mortgage calculator can help to add up all income sources and compare this to all monthly debt payments.^{[citation needed]} It can also factor in a potential mortgage payment and other associated housing costs (property taxes, homeownership dues, etc.). One can test different loan sizes and interest rates. Generally speaking, lenders do not like to see all of a borrower's debt payments (including property expenses) exceed around 40% of total monthly pretax income. Some mortgage lenders are known to allow as high as 55%.

### Monthly payment formula[edit]

See also: Compound interest § Monthly amortized loan or mortgage payments

The fixed monthly payment for a fixed rate mortgage is the amount paid by the borrower every month that ensures that the loan is paid off in full with interest at the end of its term. The monthly payment formula is based on the annuity **formula to calculate mortgage payment excel.** The monthly payment *c* depends upon:

*r*- the monthly interest rate. Since the quoted yearly percentage rate is not a compounded rate, the monthly percentage rate is simply the yearly percentage rate divided by 12. For example, if the yearly percentage rate was 6% (i.e 0.06), then*r*would be or 0.5% (i.e 0.005).*N*- the number of monthly payments, called the*loan's term*, and*P*- the amount borrowed, known as the*loan's principal*.

In the standardized calculations used in the United States, *c* is given by the formula:^{[3]}

For example, for a home loan of $200,000 with a fixed yearly interest rate of 6.5% for 30 years, the principal is , the monthly interest rate is , the number of monthly payments is , the fixed monthly payment equals $1,264.14. This formula is provided using the financial function in a spreadsheet such as Excel. In the example, the monthly payment is obtained by entering either of these formulas:

- = -PMT(6.5 / 100 / 12, 30 * 12, 200000)
- = ((6.5 / 100 / 12) * 200000) / (1 - ((1 + (6.5 / 100 / 12)) ^ (-30 * 12)))
- = 1264.14

The following derivation of this formula illustrates how fixed-rate mortgage loans work. The amount owed on the loan at the end of every month equals the amount owed from the previous month, plus the interest on this amount, minus the fixed amount paid every month. This fact results in the debt schedule:

The polynomial appearing before the fixed monthly payment *c* (with ) is a geometric series, which has a simple closed-form expression obtained from observing that because all but the first and last terms in this difference cancel each other out. Therefore, solving for yields the much simpler closed-form expression

Applying this formula to the amount owed at the end of the *N*th month gives (using to succinctly denote the function value at argument value ):

*N*

The amount of the monthly payment at the end of month *N* that is applied to principal paydown equals the amount *c* of payment minus the amount of interest currently paid on the pre-existing unpaid principal. The latter amount, the interest component of the current payment, is the interest rate *r* times the amount unpaid at the end of month *N*–1. Since in the early years of the mortgage the unpaid principal is still large, so are the interest payments on it; so the portion of the monthly payment going toward paying down the principal is very small and equity in the property accumulates very slowly (in the absence of changes in the market value of the property). But in the later years of the mortgage, when the principal has already been substantially paid down and not much monthly interest needs to be paid, most of the monthly payment goes toward repayment of the principal, and the remaining principal declines rapidly.

The borrower's equity in the property equals the current market value of the property minus the amount owed according to the above formula.

With a fixed rate mortgage, the borrower agrees to pay off the loan completely at the end of the loan's term, so the amount owed at month *N* must be zero. For this to happen, the monthly payment *c* can be obtained from the previous equation to obtain:

which is the formula originally provided. This derivation illustrates three key components of fixed-rate loans: (1) the fixed monthly payment depends upon the amount borrowed, the interest rate, and the length of time over which the loan is repaid; (2) the amount owed every month equals the amount owed from the previous month plus interest on that amount, minus the fixed monthly payment; (3) the fixed monthly payment is chosen so that the loan is paid off in full with interest at the end of its term and no more money is owed.

### Adjustable interest rates[edit]

While adjustable-rate mortgages have been around for decades,^{[4]} from 2002 through 2005 adjustable-rate mortgages became more complicated as did the calculations involved.^{[5]} Lending became much more creative which complicated the calculations. Subprime lending and creative loans such as the “pick a payment”,^{[6]} “pay option”,^{[7]} and “hybrid” loans brought on a new era of mortgage calculations. The more creative adjustable mortgages meant some changes in the calculations to specifically handle sasha banks and husband complicated loans. To calculate the annual percentage rates (APR) many more variables needed to be added, including: the starting interest rate; the length of time at that rate; the recast; the payment change; the index; the margins; the periodic interest change cap; the payment cap; lifetime cap; the negative amortization cap; and others.^{[8]} Many lenders created their own software programs, and World Savings even had contracted special calculators to be made by Calculated *Formula to calculate mortgage payment excel* specifically for their “pick a payment” program.^{[9]} However, by the late 2000s the Great Recession brought an end to many of the creative “pick-a-payment” type of loans which left many borrowers with higher loan balances over time, and owing more than their houses were worth.^{[10]} This also helped reduce the more complicated calculations that went along with these mortgages.

### Total interest paid formula[edit]

The total amount of interest that will be paid over the lifetime of the loan is the difference of the total payment amount () and the loan principal ():

where formula to calculate mortgage payment excel is the fixed monthly payment, is the number of payments that will be made, and is the initial principal balance on the loan.

The cumulative interest paid at the end of any period N can be calculated by:

### [edit]

In the United Kingdom, the FCA - Financial Conduct Authority (formerly the FSA - Financial Services Authority) regulates loans secured on residential property. It does not prescribe any specific calculation method. However, it does prescribe that, for comparative purposes, lenders must display an Annual Percentage Rate as prominently as they display other rates.

In Spain, the regulatory authority (Banco de España) has issued and enforced some good practices, such as clearly advertising the Annual Percentage Rate and stating how and when payments change in variable rate mortgages.^{[11]}

### See also[edit]

### References[edit]

### External links[edit]

## How To Calculate Your Mortgage Payment: Fixed, Variable, and More

Understanding your mortgage helps you make better financial decisions. Instead of just accepting offers blindly, it’s wise to look at the numbers behind any loan—especially a significant loan like a home loan.

### Key Takeaways

- You can calculate your monthly mortgage payment by using a mortgage calculator or doing it by hand.
- You'll need to gather information about the mortgage's principal and interest rate, the length of the loan, and more.
- Before you apply for loans, review your income and determine how much you’re comfortable spending on a mortgage payment.

### Getting Started With Calculating Your Mortgage

People tend to focus on the monthly payment, but there are other important features that you can use to analyze your mortgage, such as:

- Comparing the monthly payment for several different home loans
- Figuring how much you pay in interest monthly, and over the life of the loan
- Tallying how much you actually pay off over the life of the loan, versus the principal borrowed, to see how much you actually paid extra

Use the mortgage calculator below to get a sense of what your monthly mortgage payment could end up being,

### The Inputs

Start by gathering the information needed to calculate your payments and understand other aspects of the loan. You need the details below. The letter in parentheses tells you where we’ll use these items in calculations (if you choose to calculate this yourself, but you can also use online calculators):

- The
**loan amount**(P) or principal, which is the home-purchase price plus any other charges, minus the down payment - The annual
**interest rate**(r) on the loan, but beware that this is not necessarily the APR, because the mortgage is paid monthly, not annually, and that creates a slight difference between the APR and the interest rate - The
**number of years**(t) you have to repay, also known as the "term" - The number of
**payments per year**(n), which would be 12 for monthly payments - The
**type of loan**: For example, fixed-rate, interest-only, adjustable - The
**market value**of the home - Your
**monthly income**

### Calculations for Different **Formula to calculate mortgage payment excel**

The calculation you use depends on the type of loan you have. Most home loans are standard fixed-rate loans. For example, standard 30-year or 15-year mortgages keep the same interest rate and monthly payment for their duration.

For these fixed loans, use the formula below to calculate the payment. Note that the carat (^) indicates that you’re raising a number to the power indicated after the carat.

**Payment = P x (r / n) x (1 + r / n)^n(t)] / (1 hand sanitizer on amazon r / n)^n(t) - 1**

### Example of Payment Calculation

Suppose you borrow $100,000 at 6% for 30 years, to be repaid monthly. What is the monthly payment? The monthly payment is $599.55.

Plug those numbers into the payment formula:

- {100,000 x (.06 / 12) x [1 + (.06 / 12)^12(30)]} / {[1 + (.06 / 12)^12(30)] - 1}
- (100,000 x .005 x 6.022575) / 5.022575
- 3011.288 / 5.022575 = 599.55

You can check your math with the Loan Amortization Calculator spreadsheet.

### How Much Interest Do You Pay?

Your mortgage payment is important, but you also need to know how much of it gets applied to interest each month. A portion of each monthly payment goes toward your interest cost, and the remainder pays down your loan balance. Note that you might also have taxes and insurance included in your monthly payment, but those are separate from your loan calculations.

An amortization table can show you—month-by-month—exactly what happens with each payment. You can create amortization tables by hand, what is the routing number for first interstate bank use a free online calculator and spreadsheet to do the job for you. Take a look at how much total interest you pay over the life of your loan. With that information, you can decide whether you want to save money by:

- Borrowing less (by choosing a less expensive home or making a larger down payment)
- Paying extra each month
- Finding a lower interest rate
- Choosing a shorter-term loan (15 years instead of 30 years, for example) to speed up your debt repayment

Shorter-term loans like 15-year mortgages often have lower rates than 30-year loans. Although you would have a bigger monthly payment with a 15-year mortgage, you would spend less on interest.

### Interest-Only Loan Payment Calculation Formula

Interest-only loans are much easier to calculate. Unfortunately, you don’t pay down the loan with each required payment, but you can typically pay extra each month if you want to reduce your debt.

*Example:* Suppose you borrow $100,000 at 6% using an interest-only loan with monthly payments. What is the payment? The payment is $500.

Loan Payment = Amount x (Interest Rate / 12)

**Loan payment = $100,000 x (.06 / 12) = $500**

Check your math with the Interest Only Calculator on Google Sheets.

In the example above, the interest-only payment is $500, and it will remain the same until:

- You make additional payments, above and beyond the required minimum payment. Doing so will reduce your loan balance, but your required payment might not change right away.
- After a certain number of years, you’re required to start making amortizing payments to pay down the debt.
- Your loan may require a balloon payment to pay off the loan entirely.

### Adjustable-Rate Mortgage Payment Calculation

Adjustable-rate mortgages (ARMs) feature interest rates that can change, resulting in a new monthly payment. To calculate that payment:

- Determine how many months or payments are left.
- Create a new amortization schedule for the length of time remaining (see how to do that).
- Use the outstanding loan balance as the new loan amount.
- Enter the new (or future) interest rate.

*Example:* You have a hybrid-ARM loan balance of $100,000, and there are ten years left on the loan. Your interest rate is about to adjust to 5%. What will the monthly payment be? The payment will be $1,060.66.

### Know How Much You Own (Equity)

It’s crucial to understand how much of your home you actually own. Of course, you own the home—but until it’s paid off, your lender has a lien on the property, so it’s not yours free-and-clear. The value that you own, known as your "home equity," is the home’s market value minus any outstanding loan balance.

You might want to calculate your equity for several reasons.

**Your loan-to-value (LTV) ratio**is critical, because lenders look for a minimum ratio before approving loans. If you want to refinance or figure out how big your down payment needs to be on your next home, you need to know the LTV ratio.**Your net worth**is based on how much of your home you actually own. Having a one million-dollar home doesn’t do you much good if you owe $999,000 on the property.**You can borrow against your home**the skeleton key in hindi download second mortgages and home equity lines of credit (HELOCs). Lenders often prefer an LTV below 80% to approve a loan, but some lenders go higher.

### Can You Afford the Loan?

Lenders tend to offer you the largest loan that they’ll approve you for by using their standards for an acceptable debt-to-income ratio. However, you don’t need to take the full amount—and it’s often a good idea to borrow less than the maximum available.

Before you apply for loans or visit houses, review your income and your typical monthly expenses to determine how much you’re comfortable spending on a mortgage payment. Once you know that number, you can start talking to lenders and looking at debt-to-income ratios. If you do it the other way around (ignoring your expenses and basing your housing payment solely on your income), you might start shopping for more expensive homes than you can afford, which affects your lifestyle and leaves you vulnerable to surprises.

It’s safest to buy less and enjoy some wiggle room each month. Struggling to keep up with payments is stressful and risky, and it prevents you from saving for other goals.

### Frequently Asked Questions (FAQs)

### What is a fixed-rate mortgage?

A fixed-rate mortgage is a home loan that has the same interest rate for the life of the loan. This means your monthly principal and interest payment will stay the same. The proportion of how much of your payment goes toward interest and principal will change each month due to amortization. Each month, a little more of your payment goes toward principal and a little less goes toward interest.

### What is an interest-only mortgage?

An interest-only mortgage is a home loan that allows you to only pay the interest for the first several years you have the mortgage. After that period, you'll need to pay principal and interest, which means your payments will be significantly higher. You can make principal payments during the interest-only period, but you're not required to.