Ontario Mortgage Calculator
MORTGAGE HELP
Down Payment
In Canada the minimum down payment is tiered by purchase price rather than being a single percentage, and a purchase above a set price ceiling cannot be insured at all and requires a larger down payment. Those thresholds have been changed by the federal government more than once in recent years, so confirm the current figures with a mortgage broker or lender rather than relying on a rule of thumb. What does not change is the principle: a larger down payment means a smaller loan and a lower payment, or the same payment on a more expensive home.
Mortgage Default Insurance
Where the down payment is below twenty percent, Canadian lenders require mortgage default insurance. The premium is calculated as a percentage of the loan and is normally added to the mortgage rather than paid up front, but in Ontario the provincial sales tax on that premium is payable at closing and cannot be financed. Budget for it separately.
Term vs Amortization
These are two different things and confusing them is the most common mistake. The amortization is how long it would take to pay the mortgage off completely, commonly twenty five years, sometimes thirty depending on the product and the insurer's rules. The term is how long your current contract and rate are locked in, commonly one to five years. At the end of the term you renew at whatever rates exist then, for the balance that remains. There is no thirty year fixed rate mortgage in Canada in the way there is in the United States.
Fixed vs Variable Rate
A fixed rate stays the same for the whole term, so your payment is predictable. A variable rate moves with the lender's prime rate. Some variable products keep the payment constant and change how much of it goes to principal, others adjust the payment itself when rates move. If you are considering variable, ask specifically which of those two you are being offered, and ask what happens if rates rise far enough that your payment stops covering the interest.
Qualifying Rate
Canadian lenders do not qualify you at the rate you will actually pay. Federally regulated lenders apply a minimum qualifying rate that is higher than the contract rate, which reduces the amount you can borrow. This is why a pre approval amount often comes in lower than people expect from an online calculator. Ask your broker what rate you are being qualified at.
Payment Frequency
Monthly, semi monthly, bi weekly and accelerated bi weekly are all available. The accelerated options result in the equivalent of one extra monthly payment per year, which shortens the amortization and reduces total interest. The difference over the life of a mortgage is meaningful and it costs nothing to choose it at the outset.
Interest Rate
The rate shown in this calculator is an assumption, not a quote. Your actual rate depends on the lender, the term, whether the mortgage is insured, the type of property, your credit and your income documentation. Rates also differ between insured and uninsured mortgages, which surprises buyers with larger down payments. Always compare more than one lender or use a broker who does.
What This Calculator Does Not Include
This tool estimates principal and interest only. It does not include property taxes, condominium or maintenance fees, home insurance, utilities or maintenance, all of which are part of what the home actually costs you every month. It also excludes one time closing costs: Ontario land transfer tax, legal fees and disbursements, title insurance, home inspection, appraisal, adjustments at closing, and the provincial sales tax on mortgage default insurance if it applies. Toronto charges an additional municipal land transfer tax; Waterloo Region, Guelph, Hamilton and Halton do not.
Use This As An Estimate
The figures here are a planning estimate based on the assumptions you enter. They are not a pre approval, not a rate quote and not mortgage advice. Mathew Toussaint is a REALTOR® with eXp Realty of Canada, Inc., Brokerage, and is not a mortgage broker or lender. For a real number, speak with a licensed mortgage professional, and compare at least two.