Canadian Mortgage Calculators
Canadian Maximum Mortgage Qualification Calculator
The maximum mortgage amount that the buyer qualifies for is based on income, monthly debt payments, down payment & the home purchase price.
The following calculator makes it quick & easy to determine how much house you can afford and/or qualify for. Simply complete the entry fields in the "Input" column of all three sections. After you change any input field the calculator will automatically recompute the results.
- This is a simplified mortgage calculator & market conditions along with your actual results may vary. This tool should be used for general informational purposes only.
- For loans where the down payment is below 25% of the home purchase price, the loan will need to be insured. Insurance premiums are charged when the loan begins & vary depending upon the insurer & the amount of your down payment. The down payment amount must be at least 5% of the home's purchase price.
- Closing costs can be expected to amount to about 1.5% of the home's purchase price.
- Loan term is likely to change from the initially computed amortization period, as interest rates are locked in for a shorter period of time & when rates change it will change the principal & interest payments for the remaining life of the loan.
The old formula of calculation, which many people are used to using to determine how much they can afford when buying a home, determined the afforded amount based on three times the total gross annual income. This is not a reliable formula, though. It is more realistic to look at the personal budget and figure out how much money can be spared. Insurance, taxes, maintenance, and other factors must be considered when looking at the budget to determine what kind of house payment can be afforded. Typically, lenders do not want to let a mortgage payment exceed 28% to 44% of the total monthly income. Now, if the borrower has excellent credit, a lender may make an exception.
Making The Big Decision
Whether or not to apply for a mortgage is probably one of the most important financial decisions in a person’s life. There are many choices that must be made and a lot of terminology to learn, especially if it is the consumer’s first time purchasing a home. That is why the right advice can have a significant financial impact. It is best to be prepared and many mortgage seekers will look for pre-approved mortgages before they start shopping for the home. This allows them to establish a budget on their purchase. By knowing how much is pre-approved will help the consumer narrow down the number of homes in the search. There are also hundreds of lenders in Canada that will help the consumer in the pre-approval process and will help the consumer lock in the best interest rate possible. One such way to make the process easier is through the internet because it has changed the way people shop for their mortgages, especially with the availability of tools such as mortgage calculators to aid in the process.
Renting Versus Buying Calculator
Through a Canadian mortgage calculator, the consumer can determine whether renting or buying is more economical based on the accommodation information and the payments.
There are several aspects that are to be considered when making the decision to rent or buy a piece of property. Below explains various advantages of renting that the consumer should consider:
- To rent a home or apartment, the initial investment is rather low. The buyer often needs anywhere from 5 to 10 times the amount of cash to move into a home than simply rent an apartment.
- Renting does become rather costly. The funds that are used for the down payment could be invested into accounts with high returns. This is especially true in situations where the renter remains a resident of the property less than four years.
- The renter has less responsibility. The renter does not have to worry about repairs because it is the landlord’s responsibility. When living in a home, the consumer is responsible for all repairs and their costs.
- When renting, budgeting is a bit easier because the rent is a fixed amount that may include various expenses such as utilities. When owning a home, all utilities are separate from the mortgage payment.
- The renter has more flexibility to move. Leases can be short-term, which means the renter is free to move frequently.
- Renting consists of lower insurance costs. The entire structure does not have to be insured, just the contents of the rented property.
- The cost of moving in is low. There may be lower deposits required and no down payment may be required.
However, buying has advantages to consider:
- There are savings that are available for the buyer depending on the situation. The cost of ownership can be less than the overall cost of renting.
- The buyer has leverage because the buyer has control over the property and is aware of the capital gains from the beginning.
- If the buyer plans on paying the principal balance down by a considerable amount, savings are forced. This can be rather advantageous.
- The buyer also experiences various tax advantages such as property taxes can be tax deductible when itemized.
- The buyer experiences personal freedom. The property is owned, which means the buyer can do whatever they like with the property without a landlord telling them they can or cannot do it.
- The buyer has fewer restrictions. There are few rules that the buyer must obey, which usually includes restrictions regarding noise, children, and pets.
- With mortgage payments made on time, home ownership can actually improve credit .
Analyzing Your Home Loan
Through the use of our calculators, the payment and the balance summary can be calculated and the results can be seen in an amortization schedule.
Here are the steps used in calculating the mortgage payment:
- The monthly interest or principal payment is calculated based on the total of the mortgage, the interest rate, and the term of the mortgage.
- The annual property taxes must be determined and the number divided by the total number of payments: 12 if the payments are made monthly and 26 if they payments are made every two weeks.
- The cost of homeowner’s insurance must be determined and then divided by the total number of payments.
- If the borrower is required to pay private mortgage insurance, this must be figured in as well.
- All items must be added: the private mortgage insurance, taxes, insurance, and monthly interest or principal payment.
Paying Off Your Loan Early
Homeowners May Want to Refinance While Rates Are Low
US 10-year Treasury rates have recently fallen to all-time record lows due to the spread of coronavirus driving a risk off sentiment, with other financial rates falling in tandem. Homeowners with a steady payment history may benefit from recent rate volatility.