Mortgage Payment Calculator

"Be confident in your calculations with the Mortgage Calculator"

Untangle your monthly payments as quickly as a whistle with Urban Money’s mortgage payment calculator. Perceive exact numbers that you will have to pay throughout the mortgage term. Hinged upon calculations, count on payment that is the gold standard for you.

What is a Mortgage Calculator?

A mortgage calculator is an excellent online tool incisively designed to assist borrowers in the computation of monthly mortgage payments. Compute exact values and determine the felicitousness of the mortgage payment by entering basic details such as mortgage principal, interest rate, and amortisation period. The monthly mortgage payment tool is a cutting-edge, AI-powered tool that allows you to fathom the best mortgage deal. This high-tech tool assists you in making a gold standard decision by directing you to an optimal lender. This handy tool eliminates daunting manual computations and gives error-free results in a split second.

How to Use the Mortgage Payment Calculator?

To use Urban Money’s mortgage payment calculator with utmost ease, prepare certain useful numbers beforehand.

• Mortgage Principal: This is the initial mortgage amount.
• Mortgage Rate: The applicable interest rate based on your creditworthiness.
• Mortgage Principal: This is the initial mortgage amount.
• Amortisation Period: The mortgage repayment period
• Mortgage insurance and a down payment

With these numbers, you can compute the required values in a fraction of a second. Initially, start by entering the mortgage principal amount, interest rate, and amortisation period. Hinged on entered values, the mortgage calculator showcases the best mortgage rates in your province. The high-tech tool also permits the user to enter custom interest rates. As an outcome, the calculator will present your monthly payments. The mortgage payment calculator shows versatile monthly payments, and you can choose the one that best fits you. These monthly payments are evaluated based upon the entered down payment or upfront amount. It will calculate the cost of mortgage insurance automatically. As per your credibility, alter the down payment amount and frequency of payments. Now, you will witness a significant change in regular payments. Also known as mortgage rate calculator and mortgage interest calculator, it estimates how much you will need for foreclosure. Moreover, you can rely on this calculator to gauge the total monthly outlay and determine if there is a hike in interest rates.

How Can a Mortgage Calculator Help?

Determining your monthly payment as part of your budget is critical because it will likely be your largest recurrent expense. Urban Money’s Mortgage Calculator lets you estimate your monthly debt payment as you hunt for a mortgage or a refinance. Simply enter your details in the text fields of the calculator to investigate various possibilities. The calculator can assist you in making the following decisions:

1. A Suitable Repayment Period A 30-year repayment tenure with a fixed-rate mortgage is generally the most feasible option if you have a set budget. Such mortgages have lower monthly payments, but you'll end up paying more interest over the amortisation period. A 15-year repayment tenure with a fixed-rate mortgage minimises the total interest component, but it accounts for increased monthly payments. Count on short-term mortgages if you have some extra budget.

2. Adjustable-Rate Mortgages (ARMs) Adjustable-rate mortgages (ARMs) have mostly vanished, with fixed rates reaching all-time lows. However, when interest rates rise, an ARM may prove to be a better alternative. If you only expect to stay in your house for a few years, a 5/6 adjustable-rate mortgage with a fixed rate for 5 years and a further adjustment every 6 months will be an ideal choice. Keep in mind the alteration that can be witnessed on your monthly mortgage payment once the introductory rate ends.

3. Down Payment The standard down payment is 20 percent, but there is no hard and fast rule for this. The down payment thoroughly depends on the borrower’s budget. So, based upon your financial condition, you can determine the down payment with a mortgage calculator in Canada.

4. Calculate Monthly Expenses: Retrieving useful numbers in one go, you get the estimated amount payable every month with a mortgage calculator.

Factors that Can Affect your Mortgage Payments

There are several key factors that can affect the size of your mortgage payments. Some of these include:

1. Credit Score A credit report is a synopsis of your borrowing history counting late payments, debts, inquiries along with credit cards.

The borrower's credit score is probably one of the most vital factors that cater to estimate the mortgage rate. A motive of a credit score is to offer a lender a sense of the borrower’s creditworthiness. Technically, the higher the credit score, the more credible and less risky the borrower is. A lender will usually offer an affordable interest rate to a borrower with a good credit score. When you decide to apply for a mortgage, count on the evaluation of your credit report, which is available from credit bureaus. It's critical to double-check your credit report once you've got it to ensure there's no false information and everything is correct.

2. Location The location of the property plays a crucial role to discern monthly mortgage payments and applicable interest rates. Two major variables encompass the state and geographical location (urban or rural) of the property. The key reason is each state has its own foreclosure rules, which greatly influence the impact on how a defaulted property is foreclosed by the borrower.

3. Home Price The price bar of the mortgaged property determines the interest rate offered by the lender. Further, it helps to decode the monthly payments. The higher the price bar, the larger the mortgage amount. As the mortgage amount escalates, the involved risk rises and so does the interest rate.

4. Down Payment Down payment in mortgage terms is the upfront amount that the borrower pays to the lender. This upfront payment is the portion that the borrower pays from personal funds usually 10% of the mortgage cost.

The thumb rule of mortgage says, "the bigger the down payment, the lower the interest rate and easier the monthly mortgage payment." As per the common pattern witnessed across mortgage experiences, a borrower who pays a large upfront amount is considered at less risk and more credible. Furthermore, paying up to 20% amount as down payment results in lowering the principal mortgage amount.

The thumb rule of mortgage says, "the bigger the down payment, the lower the interest rate and easier the monthly mortgage payment." As per the common pattern witnessed across mortgage experiences, a borrower who pays a large upfront amount is considered at less risk and more credible. Furthermore, paying up to 20% amount as down payment results in lowering the principal mortgage amount.

5. Current Interest Rates in the Market The mortgage market and the Federal Reserves also contribute to the levied interest rates. The Federal Reserve is responsible to put down federal fund rates that influence the mortgage interest rates. The higher the rates, the costlier the mortgage offered by banks and finance providers.

6. Amortization Period Amortization Period is the time frame in which borrowers are supposed to repay their entire mortgage.

Short-term mortgages equate to higher monthly payments and vice versa. Long-term amortisation periods result in reduced interest rates followed by decreased monthly payments. But, at the same time, you will end up paying more in interest as you repay the mortgage over a longer time frame.

How to Quickly Calculate Mortgage?

Use a mortgage payment calculator for a quick and easy mortgage calculation. However, it's likely that you don't have constant access to an online calculator. In this circumstance, you can rely on a manual mortgage computation or an excel formula for a mortgage.

1. How to Calculate Mortgage Payments by Hand?

If you want to calculate your mortgage payment manually, here's an easy formula to do so.

M = P [ r(1+r) ^n/((1+r)^n)-1)]

Where: M denotes the monthly payment, P denotes the principal mortgage, r denotes the mortgage interest rate and n represents the number of payments through the amortisation period.

For Example

Substitution, values in the mortgage calculation formula:

2. Excel Formula for Monthly Mortgage Payment Calculation

Excel's ability to compute mortgage-related calculations such as mortgage interest and monthly mortgage payments is one of its foremost features. You can easily create a mortgage payment calculator in Excel, even if you're not very familiar with Excel operations. First, open Excel and select "Blank Workbook." Second, create your category column with 6 variables. These variables are mortgage amount, interest rate, amortisation period, number of payments (annually), total number of payments, and monthly payment. The monthly mortgage payment column will be empty and the rest of the values will need to be entered manually. Enter significant values for each variable to move forward with the mortgage payment calculation in Excel. In the column adjacent to the monthly payment, write the formula: PM (B2/B4, B5, B1,0) In the output, you will get the monthly payment.

Know about Mortgage Payments

In addition to the mortgage payment calculator, you must be familiar with various other terms, including the basics of the mortgage payment, key considerations, and much more:

What is a Mortgage Payment?

A mortgage payment is an amount that the borrower is supposed to pay each month throughout the repayment tenure. This amount needs to be paid till you repay the entire mortgage amount. Mortgage Payment includes the principal and interest components. During the initial repayment tenure, the interest component is higher, whereas, through the final years, the principal component is higher. However, it may or may not cover mortgage default insurance, property tax, and other associated charges. When you initially start making payments, much of the amount goes toward covering the interest component. But as time goes on, this payment shifts more towards fulfilling the mortgage debt.

Key Considerations for your Mortgage Payments The principal and interest on a mortgage make up a large portion of the monthly payment. The debt amount is termed as the principal amount and the interest is the amount that the borrower pays to the lender for the privilege of borrowing it. However, the lender may also collect an additional monthly payment to put into escrow, which the lender directly pays to the local property tax collector and the insurance company.

Costs involved in mortgage payments:

• Principal: The amount borrowed by the lender..
• Interest: The amount charged by lenders to offer the borrower the principal amount of debt. (Usually expressed in annual percentage)
• Property TaxesTaxes levied on the property by the local authorities. If your lender maintains your escrow account, then the taxable amount is deducted on a monthly basis through your mortgage payments.
• Mortgage Insurance: If you choose to pay an upfront amount below 20% of the property price, you become liable to be on the hook for default mortgage insurance. Insurance costs will be added to your monthly mortgage payments in a significant amount.

When Would You Require a CMHC Insurance?

Your mortgage provider pays the CMHC insurance premiums on your behalf. The CMHC insurance amount is a specific percentage of the mortgage principal. For mortgages in Ontario, Quebec, Manitoba, and Sadkatachewan, a provincial sales tax is appended to the payable premiums.

If the borrower chooses to make less than a 20% down payment, insurance premiums will begin at 2.4 percent of the principal mortgage amount.The premium amount rises to 4% for down payments of 5% on the principal amount.

While the mortgage provider covers the insurance premium, they most likely pass the expense on to the borrower indirectly. However, you can still save a significant amount as insured mortgages often have lower interest rates.

The key benefit of CMHC insurance is that it allows you to make a down payment of as little as 5% of the mortgage value. Use the CMHC insurance calculator to figure out how much CMHC insurance you'll need to pay for your mortgage.

CMHC Insurance Premiums

Mortgage Payment Frequency

The frequency of payment that the borrower can make towards the debt amount is termed as Payment Frequency. Mortgage payment frequency is classified into four categories:

• Monthly Payments
• Semi-monthly Payments
• Bi-weekly Payments
• Weekly Payments

In addition to usual payment options, you get the option to make accelerated payments weekly or bi-weekly. However, the mortgage payments are higher than the regular payment frequencies.

Payment Frequency and Number of Annual Payments

Important Points to Get Approved for a Mortgage

For newbies, getting mortgage approval in one go can be nerve-wracking. To hit the Bonzai in your very first attempt, an array of factors must be considered.

Credit Score: Your credit score is based on your payment history along with borrowing behaviors. To evaluate a mortgage application, lenders usually count on the credit score. An applicant with a higher credit score has more chances of approval as compared to the one with a lower credit score. Before, applying for a mortgage, always take your credit score into consideration and if needed improve it. Pay down existing debt, make on-time payments, and don’t apply for new credit in the months leading up to your mortgage. All these pointers will help in improving the credit score and securing approval of the mortgage.

Debt-to-Income Ratio A debt-to-income ratio, or DTI, is the amount of debt in relation to your income. For quick and uninterrupted approval, you must have a debt-to-income ratio of around 43 percent at max. Smaller lenders may be more lenient in enabling you to borrow a little more, but larger lenders have tougher guidelines and limit your DTI ratio to 36 percent.

Down Payment Lenders prefer that the borrower put money down on an upfront amount for a home so that they have some equity in it. With a significant down payment amount of up to 20 percent of the property cost, the lender decreased the overall percentage of involved risk. Additionally, it acts as a parameter to determine borrowers’ credibility. Moreover, be ready with the down payment amount as you have to pay it from your personal funds.

Work History Regardless of the mortgage type, i.e., conventional mortgage, or FHA loan, you must have a good work record along with authentic employment proof. A borrower with an employment track of at least two years has more chances of getting mortgage approval in one go. A steady income source is considered a good factor when it comes to determining borrowers’ creditworthiness

Your Affordability Make sure that you apply for a mortgage that you can repay. In addition to property costs, take other associated costs into consideration. You need to determine if you will be able to afford these costs or not. Don’t burden yourself with huge debt, as you have to pay the amount for years.

How Much Interest Do You Save by Paying off Mortgage Early?

The amount of interest you save by paying off the mortgage early depends upon the remaining repayment tenure. During the initial years of mortgage repayment, your monthly repayment covers a higher interest component. Thus, if you decide to pay off the mortgage during the initial years, you will save a huge amount in terms of interest and will have to repay just the principal amount. However, with time, in the final years of repayment, the principal component is higher. By now, you have already paid the interest component and only the principal amount is left. If you decide to repay the amount in the final years, you won’t save any significant amount as there is a negligible interest component to save upon.

Is Paying Off a Mortgage Better than Saving?

As per the financial perspective, you must count on investing your money as opposed to funnelling your savings towards paying off the mortgage faster. There are several reasons why the borrower might prefer to pay off the mortgage sooner rather than later. One of the foremost benefits of paying off a mortgage earlier is you save huge on the interest component. With mortgage foreclosure, you can save thousands of dollars. When you decide to repay your mortgage, you unlock a great deal in terms of interest savings. Another benefit of paying off the mortgage earlier is peace of mind. The constant idea of debt payment for decades is not going to haunt you anymore. You will be the sole owner of your property. However, you can’t neglect a few drawbacks such as tax benefits, tying up your wealth to illiquid assets, and future opportunities of meeting your other financial goals.

FAQ’s