Work out your payment, CMHC insurance, the stress test you need to pass, and what you will still owe when your term is up. Calculated with Canadian semi-annual compounding.
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Accelerated payments take your monthly payment, split it in two (or four), and pay it every two weeks (or every week). That adds up to one extra monthly payment a year, all of it going to principal.
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In Canada, fixed-rate mortgages are compounded semi-annually by law, not monthly like in the U.S. A 5% Canadian mortgage actually works out a little cheaper than a 5% American one. Many online calculators get this wrong. This one doesn't.
For a $400,000 mortgage at 5% over 25 years, the correct Canadian monthly payment is $2,326.42.
With less than 20% down, your mortgage must be insured against default.
The premium is a percentage of your mortgage and is added to the balance:
A 30-year amortization (first-time buyers and new builds) adds 0.20%. Insurers include CMHC, Sagen and Canada Guaranty, and they charge similar rates.
To qualify at a federally regulated lender, you must show you could afford payments at the higher of your contract rate plus 2% or 5.25%.
Your actual payment is based on your real rate. The stress test only decides how much you are approved for.
Amortization is the total time to pay the mortgage off, usually 25 or 30 years. The term is how long your current rate and contract last, usually 1 to 5 years. When the term ends you renew, often at a new rate, on whatever balance is left.
No. Regular bi-weekly spreads twelve monthly payments over 26 pay periods, so you pay the same amount per year. Accelerated bi-weekly pays half your monthly payment every two weeks. That adds up to 13 monthly payments a year and cuts years off your mortgage.
In Ontario, Quebec and Saskatchewan, provincial sales tax applies to the premium. It must be paid in cash at closing and cannot be added to your mortgage.
No. Mortgage default insurance is only available on homes priced under $1.5 million, so pricier homes need at least 20% down.
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