Loading Mortgage Calculator…
Canadian mortgages compound semi-annually by law, which makes the payment slightly lower than the US formula gives.
$1,838.92
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | $2,947 | $14,320 | $237,053 |
| 2 | $3,129 | $14,138 | $233,924 |
| 3 | $3,322 | $13,945 | $230,602 |
| 4 | $3,527 | $13,740 | $227,075 |
| 5 | $3,744 | $13,523 | $223,330 |
| 6 | $3,975 | $13,292 | $219,355 |
| 7 | $4,221 | $13,046 | $215,135 |
| 8 | $4,481 | $12,786 | $210,654 |
| 9 | $4,757 | $12,510 | $205,896 |
| 10 | $5,051 | $12,216 | $200,846 |
| 11 | $5,362 | $11,905 | $195,484 |
| 12 | $5,693 | $11,574 | $189,791 |
| 13 | $6,044 | $11,223 | $183,747 |
| 14 | $6,417 | $10,850 | $177,330 |
| 15 | $6,813 | $10,454 | $170,517 |
| 16 | $7,233 | $10,034 | $163,284 |
| 17 | $7,679 | $9,588 | $155,606 |
| 18 | $8,152 | $9,115 | $147,453 |
| 19 | $8,655 | $8,612 | $138,798 |
| 20 | $9,189 | $8,078 | $129,609 |
| 21 | $9,756 | $7,511 | $119,853 |
| 22 | $10,358 | $6,909 | $109,495 |
| 23 | $10,996 | $6,271 | $98,499 |
| 24 | $11,675 | $5,592 | $86,824 |
| 25 | $12,395 | $4,872 | $74,429 |
| 26 | $13,159 | $4,108 | $61,270 |
| 27 | $13,971 | $3,296 | $47,299 |
| 28 | $14,833 | $2,434 | $32,466 |
| 29 | $15,747 | $1,520 | $16,719 |
| 30 | $16,719 | $548 | $0 |
A mortgage calculator exists to answer two questions a listing never tells you: what the house costs every month, and how much of the total price is interest rather than house. Buyers use it to work out what they can carry; existing owners use it to test whether an extra payment each month is worth making; and anyone comparing a 15-year term against a 30-year one needs it because the difference is not intuitive — halving the term does not double the payment.
Put in a $300,000 price with $60,000 down and you are borrowing $240,000. At 6% over 30 years on the US convention, the principal-and-interest payment is $1,438.92 a month. Over the full term you pay $518,011.65, of which $278,011.65 is interest — more than the amount borrowed.
The first payment is the one that surprises people. Interest for month one is $240,000 × 0.5% = $1,200.00, so only $238.92 of that $1,438.92 goes to the balance. By the end of year one you have paid $14,319.83 in interest and $2,947.23 in principal, leaving $237,052.77 owed.
Add $200 a month and the picture changes sharply: the loan clears in 265 months instead of 360 — 7 years 11 months early — and total interest falls to $192,926.32, a saving of $85,085.34. Add the sample $3,600 property tax and $1,200 insurance and the monthly figure at the top becomes $1,838.92, because those are billed on the house, not the loan.
The scheduled payment comes from the standard annuity formula: payment = P × r ÷ (1 − (1 + r)^−n), where P is the amount borrowed, n is the number of monthly payments and r is the interest rate for one month. Each month the calculator charges interest of balance × r, applies whatever the payment leaves over to the balance, and repeats until the balance reaches zero.
A US mortgage quotes a nominal annual rate that is simply divided by twelve, so 6% means 0.5% a month. Canadian mortgages are required by law to compound no more than semi-annually, so a quoted 6% means 3% every six months, and the equivalent monthly rate is (1 + 0.06 ÷ 2)^(1÷6) − 1 = 0.4938622% — slightly less than 0.5%.
On the same $240,000 loan that gap is worth $11.34 a month: $1,427.58 on the Canadian convention against $1,438.92 on the US one, and $273,927.44 of interest against $278,011.65. Small per payment, $4,084 across the term. Use the setting that matches where the loan was written; using the US formula on a Canadian mortgage makes every figure on the page slightly wrong in the same direction.
The projection assumes a fixed rate for the whole term and a payment made on schedule every month. It does not model a variable or adjustable rate, a rate reset at renewal, mortgage insurance (PMI or CMHC), HOA or condo fees, closing costs, or the tax deductibility of interest in jurisdictions that allow it.
Interest is charged on the balance outstanding, and at the start the balance is nearly the whole loan. On the example above, month one splits $1,200 to interest and $238.92 to principal. The split reverses gradually — it is the same payment every month, but the interest share shrinks as the balance does.
In total interest, substantially — you are borrowing the same money for half as long. The payment does not double, though: it rises by roughly 50% on typical rates, which is why the 15-year term is affordable to fewer buyers than the interest saving suggests it should be.
The term. A fixed-rate mortgage keeps the scheduled payment fixed, so anything extra goes straight against principal and the loan simply ends sooner. Some lenders will re-amortize on request to lower the payment instead; that is a separate transaction and usually carries a fee.