Mortgage Payment Calculator 2025
This Page’s Content Was Last Updated: January, 2025
Press calculate to get your results now!
Glossary and FAQ
On this page, we will cover:
Payment Frequency
Your mortgage’s payment frequency is how often you will make mortgage payments.
Your mortgage payment frequency can be:
- Monthly
- Semi-monthly
- Bi-weekly
- Weekly
There are also accelerated payment frequency options:
- Accelerated bi-weekly
- Accelerated weekly
What's the difference between a monthly and bi-weekly mortgage payment frequency?
- Monthly mortgage payments are made once per calendar month, totaling 12 payments yearly.
- Bi-weekly mortgage payments are made once every two weeks equally 26 payments per year.
Calculating bi-weekly payments
There are 52 weeks in a year. Making a payment every two weeks equates to 26 mortgage payments yearly; that’s a payment every other week for 52 weeks.
52 weeks
A payment frequency of 2 weeks
= 26 bi-weekly payments in a year
Another way to look at bi-weekly payments is to calculate their frequency in days.
Bi-weekly payments are made every 14 days. A payment every 14 days over 365 days gives 26 bi-weekly payments yearly.
365 days
A payment frequency of 14 days
= 26 bi-weekly payments in a year
Mortgage Payment Frequency and Payments Per Year
Payment Frequency
Payments Per Year
Equivalent to Monthly Payments per Year
Monthly
12
12 Monthly Payments
Semi-Monthly
24
12 Monthly Payments
Bi-Weekly
26
12 Monthly Payments
Accelerated Bi-Weekly
26
13 Monthly Payments
Weekly
52
12 Monthly Payments
Accelerated Weekly
52
13 Monthly Payments
Are semi-monthly mortgage payments the same as bi-weekly mortgage payments?
No, semi-monthly mortgage payments are not the same as bi-weekly mortgage payments. With a semi-monthly mortgage payment, you make a mortgage payment twice in one month. For example, you might make a payment on the 1st of the month and another on the 15th. This is repeated every month throughout the calendar year.
Semi-monthly mortgage payments split the monthly amount due into two portions; you pay half the monthly amount, not double. Over 12 months, you’ll make 24 semi-monthly mortgage payments.
Bi-weekly payments are mortgage payments made every two weeks, every 14 days. While two bi-weekly payments will be made in any 28 days, most months have either 30 or 31 days, except for February. Over a year, this means you’ll make 26 bi-weekly mortgage payments, reflecting that there are 52 weeks in a year.
Essentially, bi-weekly mortgage payments have two extra payments every year (26 yearly) compared to semi-monthly mortgage payments (24 yearly). This is equivalent to an additional monthly mortgage payment compared to the number of payments on a monthly or semi-monthly mortgage payment scheme.
Accelerated Mortgage Payments
Accelerated bi-weekly and accelerated weekly mortgage payments also mean homeowners make the equivalent of an extra monthly mortgage payment every year. However, accelerated payments differ from non-accelerated bi-weekly and weekly payments because the mortgage payment amount is not reduced.
Non-Accelerated Mortgage Payments
Non-accelerated bi-weekly and weekly mortgage payments are based on the monthly mortgage payment. A homeowner pays the same monthly amount, just via smaller individual payments.
- Non-accelerated bi-weekly payments are calculated by multiplying the monthly mortgage payment by 12 to get the amount due every year and dividing it by 26 to create bi-weekly payments. The total amount you pay annually is the same as with a monthly mortgage payment frequency, but each non-accelerated bi-weekly payment is smaller.
- Non-accelerated weekly mortgage payments are calculated in the same way. Multiply the monthly mortgage payment by 12 to find the annual amount, then divide it by 52 to create a weekly sum. A weekly payment is made every 7 days.
How Do Accelerated Mortgage Payments Work?
With accelerated bi-weekly payments, you’ll still make a payment every 14 days (two weeks), totaling 26 bi-weekly payments in a year. Divide the monthly mortgage payment into two to calculate the accelerated bi-weekly amount.
Bi-weekly payments are equivalent to 13 monthly payments (calculated over 52 weeks) rather than 12 monthly payments yearly. By not adjusting for the additional monthly payment on an accelerated bi-weekly scheme (made by simply dividing the monthly payment in half), you will make an extra monthly payment every year.
The same principle applies to accelerated weekly payments. To find the accelerated weekly payment amount, divide your monthly mortgage payment by four.
Accelerated bi-weekly mortgage payments allow you to pay off your mortgage faster, shortening the amortization period and saving you thousands in mortgage interest costs.
Paying Your Mortgage Weekly vs. Monthly
With non-accelerated payments, there isn’t much difference between paying your mortgage weekly or monthly because the total amount collected annually is the same with both payment frequencies. Weekly payments are smaller and more frequent but, over a year, add up to the same sum as the full monthly payment paid twelve times a year.
The key difference is with accelerated weekly payments. Essentially, you are overpaying your mortgage, which can take months or years of amortization and save you thousands of dollars in interest payments.
Which payment schedule is right for me?
While it will depend on your specific situation, here are some general guidelines:
- Most people synchronize their mortgage payments with their monthly or bi-weekly paychecks, making budgeting easier.
- More frequent mortgage payments will reduce your mortgage term a little, also lowering the lifetime mortgage cost. This can be achieved by making overpayments when you can afford it or opting for accelerated payment frequencies.
Mortgage Payment Frequency Example
Let’s compare mortgage payment frequencies by using an example of a $500,000 mortgage with a 25-year amortization and assume a fixed mortgage rate of 1.5% for a 5-year term.
The monthly mortgage payment would be $2,000. Let’s see how much it would be with semi-monthly, bi-weekly, and weekly mortgage payments.
Comparing a $2,000 Monthly Payment Frequency
Payment Frequency
Payment Formula
Number of Payments per Year
Mortgage Payment Amount
Total Mortgage Payments per Year
Monthly
$2,000/1
12
$2,000
$24,000
Semi-Monthly
$2,000/2
24
$1,000
$24,000
Bi-Weekly
$2,000×12/26
26
$923
$24,000
Weekly
$2,000×12/52
52
$461
$24,000
Accelerated Bi-Weekly
$2,000/2
26
$1,000
$26,000
Accelerated Weekly
$2,000/4
52
$500
$26,000
Monthly, semi-monthly, bi-weekly, and weekly all add up to the same amount paid per year, a total of $24,000. However, with accelerated payments, you’re paying an extra $2,000 per year, equivalent to an additional monthly mortgage payment. This extra mortgage payment will pay down your mortgage principal faster, meaning you’ll be able to pay off your mortgage more quickly.
This mortgage calculator lets you choose between monthly and bi-weekly mortgage payments, allowing you to compare the impact on your mortgage payment easily. The amortization schedule below the Canada mortgage calculator will also reflect the payment frequency.
Down Payment
The down payment or deposit is the amount you will pay upfront to obtain a mortgage. A larger down payment reduces the amount you need to borrow, meaning your monthly mortgage payments will be smaller.
The down payment you enter in the mortgage calculator will affect the opening balance of your mortgage. If you choose a down payment of less than 20%, the mortgage payment calculator will add the cost of CMHC insurance premiums to your mortgage, including them in your principal balance.
What’s my minimum down payment?
Your minimum down payment depends on the purchase price of your property.
- If your purchase price is under $500,000, your minimum down payment is 5%.
- If your purchase price is $500,000 to $999,999, your minimum down payment is 5% of the first $500,000 plus 10% of the remaining portion.
- If your purchase price is $1,000,000 or more, your minimum down payment is 20% of the entire purchase price.
If you’re self-employed or have poor credit, your lender may require a higher down payment.
Are there additional costs or restrictions associated with small down payments?
Yes. If your down payment is below 20% of the purchase price, you must purchase mortgage default insurance, and your amortization period cannot exceed 25 years.
For more information, see the section on CMHC insurance below.
What is a high-ratio mortgage?
The term ratio refers to the size of your mortgage loan amount as a percentage of the total property purchase price. A mortgage with a down payment of 20% or less is a high-ratio mortgage because your loan will be at least 80% of the overall purchase price.
All high-ratio mortgages require CMHC insurance to reflect the higher risk of customer default.
Amortization
Your mortgage’s amortization period is the length of time that it will take to pay off your mortgage, also known as the mortgage term. A shorter amortization period means your mortgage will be paid off faster, but your mortgage payments will be higher. A more extended amortization period means your mortgage payments will be smaller, but you’ll pay more interest over the term.
You can use a mortgage amortization calculator to see how changing the period will affect your mortgage payment. This mortgage calculator also lets you customize your mortgage’s amortization.
In the mortgage calculator above, you can enter any amortization period from 1 year to 30 years. Some mortgages in Canada, such as commercial mortgages, allow an amortization of up to 40 years. It is even possible to get a non-amortizing, interest-only mortgage. However, this calculator is unsuitable for calculating payments on a non-amortizing interest-only mortgage.
What amortization period should I choose?
Here are some general guidelines for choosing an amortization period for your mortgage:
- Most mortgages in Canada have an amortization period of 25 years so this is a good standard starting point to calculate your monthly repayments.
- A longer amortization period lowers monthly payments if you are concerned about cash flow. However if you want an amortization period over 25 years, then you must have at least a 20% down payment.
- A shorter amortization means you'll pay off your mortgage principal balance faster and lower the lifetime interest cost. However, it will also mean a higher monthly or bi-weekly mortgage payment.
- Insured high-ratio mortgages cannot have an amortization that is over 25 years.
Mortgage Term
The term of your mortgage is the length of your mortgage contract with the lender. Assuming you meet all the repayments, your mortgage will end at the pre-determined date in the loan schedule. Your mortgage contract also includes the mortgage interest rate for the term. If you haven’t paid off the mortgage in full by the end of the term, you will need to renew it for another period and it will probably be subject to a different interest rate.
Many people fix their interest rates in deals shorter than the overall mortgage term, providing a predictable and often lower rate, impacting monthly repayments. When your current contract ends, you will need to negotiate a new arrangement with your lender.
This mortgage calculator uses the most popular mortgage terms in Canada: one, two, three, four, five, and seven-year mortgage terms.
What term should I choose?
The most popular term length in Canada is 5 years, which generally works well for most borrowers. Lenders will have many options for term lengths, with varying mortgage rates. Longer terms commonly have a higher mortgage rate, while shorter terms have lower interest rates.
What happens at the end of a term?
At the end of the term, you must either renew or refinance your mortgage unless you can pay it off in full.
- Renewing your mortgage means contracting for another mortgage term, probably on a different interest rate which will change the monthly payment. Mortgage renewals are done with the same lender.
- Refinancing means going to a new lender and signing a fresh mortgage agreement. This allows you to borrow more (subject to approval), take advantage of lower interest rates on deals designed to attract new customers, and lock in a mortgage rate early.
Interest Rates
Your mortgage’s interest rate is shown as an annual rate, and it determines how much interest you pay on your mortgage based on your principal balance.
The mortgage calculator above allows you to choose between variable and fixed rates. Changing your mortgage rate type will also change the mortgage terms available to you.
How does the interest rate affect the cost of my mortgage?
Your regular monthly mortgage payments include principal (capital) and interest repayments. A higher interest rate increases the total interest you pay on your mortgage, making it more expensive, and you’ll have higher monthly payments. A lower interest rate reduces the cost of borrowing and can save thousands of dollars over the mortgage term.
Interest rates are not the only thing that determines the cost of your mortgage. Other factors include the size of your mortgage, the mortgage term length, and if you require CMHC insurance. These all impact how much you can afford to borrow.
What's the difference between a fixed and variable rate?
- A fixed interest rate remains unchanged for the length of your mortgage term.
- A variable interest rate can change during the mortgage term. It won't affect your mortgage payment during the term but adjusts the monthly repayment percentage to pay off the mortgage principal.
What controls a variable interest rate?
Variable interest rates fluctuate based on the prime rate set by your lender. If your lender increases their prime rate, then the variable interest rate on your mortgage will increase.
Your variable mortgage rate is priced at a discount or a premium to your lender’s prime rate. Lenders usually only change their prime rates to follow movements in the Bank of Canada’s policy interest rate. If the lender’s funding costs increase because the Bank of Canada raises its policy rate, then the lender will, in turn, increase their variable mortgage rates.
Prime rates are generally similar or identical between different lenders, with all Canadian banks currently having a prime rate of 5.45% as of December 2024.
Should I choose a fixed or variable rate?
A variable rate lets you benefit from decreases in market interest rates, but it will cost you more if interest rates rise. Fixed rates are a better option if interest rates are likely to increase in the future, but this can be hard to predict. Also, it can lock you in at a higher rate when rates are falling.
Of course, it’s not possible to precisely predict future interest rates, but a 2001 study found that variable interest rates outperformed fixed interest rates up to 90% of the time between 1950 and 2000. So, if you’re comfortable with the risk of fluctuating monthly repayments, a variable mortgage rate can result in an overall lower cost over the lifetime of your mortgage.
Mortgage Payment Options
Skip a Mortgage Payment
Many lenders offer flexible mortgage payment options, such as the ability to skip a payment or defer your mortgage payments.
Most of Canada’s major banks allow you to skip a mortgage payment, except for CIBC and National Bank. Generally, you won’t be able to skip mortgage payments for insured mortgages. Missing a mortgage payment means that the sum is added to the end of the mortgage, increasing the mortgage term. If you have a CMHC-insured mortgage, your amortization cannot exceed 25 years. Therefore, for insured mortgages, you must have made a mortgage prepayment that equates to the monthly payment you want to skip to be able to do this.
You must meet your lender’s criteria to skip a mortgage payment. Your mortgage should not be in arrears, and your current mortgage balance must not be more than the original mortgage balance at the start of your term.
What Happens If You Skip a Payment?
Skipping a mortgage payment doesn’t mean that the lender is giving it to you for free. Skipping a payment just means that you’ll be paying it back later. When you skip a mortgage payment, interest that would have been charged would be added to your mortgage balance instead of being paid off. This increases your mortgage balance, which means that you’ll be paying interest on your added interest.
If you don’t repay the skipped mortgage amount plus accumulated interest within a few months, then you’ll be paying interest on the interest for the rest of your mortgage’s amortization, making skipping a mortgage payment a very costly option to take. Most lenders will allow you to repay missed payments without any prepayment penalties.
How Often Can I Skip Mortgage Payments?
Lender
How Often?
RBC
Once Every 12 Months Or If Prepayments Were Made
TD
Once Every Calendar Year Or Up to Four Months if Prepayments Were Made
BMO
Up to Four Months Every Calendar Year
Scotiabank
If Prepayments Were Made
CIBC
Never
National Bank
Never
RBC Skip-A-Payment Option
RBC allows you to skip one month’s worth of mortgage payments once every 12 months. If your mortgage payment frequency is not monthly, then they will need to be skipped consecutively. For example, if you have bi-weekly or semi-monthly payments, then you will be able to skip two consecutive mortgage payments every 12 months. For weekly payments, you’ll be able to skip four consecutive weekly payments.
If you have made extra mortgage payments in the same term, you’ll be able to skip an equivalent amount of mortgage payments. For example, if you’ve made two double-up payments, equivalent to two extra monthly payments, then you’ll be able to skip two months’ worth of mortgage payments.
TD Payment Pause
TD lets you skip a monthly payment, or the equivalent of a monthly payment, once every calendar year. TD only allows you to skip a monthly payment four times throughout the life of your mortgage. For example, if your TD mortgage has an amortization period of 25 years, you won’t be able to skip payments more than four times with TD over those 25 years.
TD lets you prepay in advance to skip more payments if needed. This “payment vacation” is allowed for up to four months at a time. For example, you’ve made four months worth of mortgage prepayments towards your TD mortgage. You’ll now be able to skip four months of mortgage payments.
BMO Take a Break Option
BMO lets you skip one months worth of mortgage payments every calendar year. BMO also has a Family Care Option that allows borrowers to skip four mortgage payments per calendar year to take care of your family, such as caring for a new baby or a sick family member.
Self-employed mortgage borrowers are not able to use BMO’s Family Care Option. Borrowers that are receiving mortgage disability benefits from their mortgage insurance are also not able to skip mortgage payments.
Scotiabank Miss-a-Payment
Scotiabank’s Miss-a-Payment lets you skip mortgage payments if you have already prepaid an equivalent amount. This could be by making a lump-sum mortgage prepayment, by increasing your regular mortgage payments, or by matching a payment.
Double Mortgage Payments
All of Canada’s major banks allow you to double-up or increase your mortgage payments to pay off your mortgage faster.
Lender
Allows You to Double Mortgage Payment?
Increase Regular Mortgage Payment Amount By
RBC
Yes
10%
Scotiabank
Yes
15%
TD
Yes
100%
BMO
No
20%
CIBC
Yes
100%
National Bank
Yes
–
RBC Double-Up Mortgage Payments
RBC lets you make a mortgage prepayment that is up to the amount of your regular mortgage payment during your regular payment date. The minimum amount for Double-Up payments is $100, and goes up to 100% of your regular payment amount. The Double-Up payment is used to pay your mortgage principal balance.
Scotiabank Match-a-Payment
Scotiabank’s Match-a-Payment allows you to double your regular mortgage payment for any payment. You’ll also be able to increase your mortgage payment by up to 15% once per year.
TD Double Mortgage Payments
You can choose to increase your regular TD mortgage payments by up to 100% once every calendar year, up until the increase is equivalent to 100% of your regular mortgage payment. This allows you to double your regular payments.
BMO Double Mortgage Payments
BMO allows you to increase your regular mortgage payments by up to 20% once per calendar year, or up to 10% for BMO Smart Fixed Mortgages.
CIBC Double Mortgage Payments
You can double your mortgage payments or increase it up to 100% at any time with CIBC.
National Bank Double Mortgage Payments
National Bank lets you make an additional payment on top of your regular payment, which can be up to 100% of your regular payment amount, on each of your regular payment dates.
Mortgage Prepayments
Prepaying your mortgage allows you to pay down your principal balance directly, making you mortgage-free sooner. Banks and mortgage lenders have limits on the amount of mortgage prepayments that you can make annually for closed mortgages without incurring prepayment penalties. You won’t have any prepayment limit or charges if you have an open mortgage.
How Much Mortgage Prepayments Can I Make?
Lender
Annual Limit (% of original mortgage amount)
RBC
10%
Scotiabank
15%
TD
15%
BMO
20%
CIBC
10% for Fixed Mortgages 20% for Variable Mortgage
National Bank
10%
Mortgage Payment FAQ
Does Mortgage Payments Include Property Tax?
Many mortgage lenders require you to pay property taxes through them as part of your regular mortgage payment, with your lender then paying your municipality. Failure to pay property taxes can lead to your municipality placing a lien on your property, which will be ahead in line and have priority over your lender’s claim on your home.
If you pay your property taxes through your lender, the lender will estimate a monthly amount to cover the total property taxes for that year. If the amount the lender collects is insufficient to cover the actual property tax due, then the lender will advance the correct amount to the municipality and charge you for the shortfall.
Your lender may charge you interest on the amount of any shortfall and pay you interest if you have overpaid and have a surplus. Property tax bills or notices must be sent to your lender. Failing to do so may mean the property tax amounts are not accurate.
If your lender pays property tax on your behalf and adds the cost to your mortgage payments, you will still receive a copy of your municipality’s property tax bill or a mortgage tax bill. Mortgage deferrals or opting to skip a mortgage payment doesn’t mean you can also skip your property tax payment or mortgage life insurance premiums. You’ll still need to pay your property taxes and insurance premiums. Skipping a payment defers the interest and principal monthly mortgage repayment, not anything else.
Some lenders allow you to pay your own property taxes. However, they have the right to ask you to provide evidence.
If you pay your property taxes, your municipality may have different property tax due dates. These may be annually or via monthly or semi-annual instalment payments on a tax payment plan.
What Happens If I Make A Late Mortgage Payment?
Unfortunately, missing a mortgage payment because you forgot or had insufficient funds in your account can happen. A mortgage payment is deemed late if it’s not paid on the due date.
Missing a mortgage payment means that you need to catch up by making a double payment the following month. Otherwise, you will permanently be one month behind on your mortgage payments, and they will all be considered late.
Your lender will contact you if you miss a mortgage payment. They will let you know how to make up the missed payment, such as taking the payment before the next payment due date or doubling it at the next payment date. Depending on your mortgage contract, you might be charged a late payment fee or a non-sufficient funds (NSF) fee.
If your mortgage payment hasn’t been overdue for an extended period, and you promptly pay back the missed payment, your lender may not report it to the credit bureaus. Even so, missing your mortgage payment by one day makes it a late payment. If you miss multiple mortgage payments, your lender can report it, which will negatively impact your credit score and stay on your credit report for up to six years, impacting future borrowing.
Your mortgage lender might offer features such as skipping a mortgage payment or payment deferrals; however, you must select to use this feature beforehand. You cannot simply miss a payment and then elect to have a payment feature applied retrospectively.
Remember that these requests also take a few days to be processed. If your request is within a few days of your payment date, then your current payment may still go through and the option to skip applied to your next payment. Lenders will not allow you to use skip-a-payment options if your mortgage is in arrears.
What are mortgage statements?
A mortgage statement outlines essential information about your mortgage. Mortgage statements are usually annual and sent by mail between January and March. You may also opt to receive your mortgage statement online.
For example, TD produces annual mortgage statements in January, while CIBC produces them between January and March. If you have an annual mortgage statement, it will usually be dated December 31. You may also request a mortgage statement to be sent to you at other times if you want up-to-date figures ahead of a potential house move or for financial planning purposes.
Information on a mortgage statement is up to the end of your statement period and includes:
- Current interest rate
- Principal balance
- The monthly mortgage payment amount
- Total of mortgage payments made
- Remaining amortization
- Property tax payment
- Mortgage life insurance or mortgage creditor insurance premiums
Mortgage Life Insurance
Mortgage Insurance vs. Life Insurance
Mortgage life insurance is an optional policy you can purchase from your mortgage lender to protect your mortgage balance. If you pass away, a death benefit is paid to your lender to redeem some or all of the mortgage balance. If you develop a critical illness, become disabled, or lose your job, you’ll also receive a payout that helps cover some or all your monthly mortgage payments. Insurance payments are always made direct to your lender.
Contrast this with general life insurance when you purchase a policy where you can nominate the beneficiary. You can also choose a policy with payout benefits that are not tied to the balance of your mortgage.
Mortgage life insurance premiums are based on the borrower’s age and their mortgage balance. Premiums are charged at a specific rate per $1,000 of mortgage balance. Mortgage life insurance in Canada is entirely optional. A lender can’t force you to purchase mortgage life insurance, irrespective of the size of your down payment. However, if you make a down payment of less than 20%, your lender can require you to purchase mortgage default insurance.
Mortgage life insurance can be easier to obtain. However, the insurance benefit gradually decreases as you make the mortgage payments, meaning the benefit gets smaller while your insurance premiums stay the same.
Can I Cancel My Mortgage Life Insurance?
All of Canada’s major banks allow you to cancel your mortgage life insurance anytime and receive a refund if you cancel your plan within the first 30 days. This 30-day free look or 30-day review period is important as it lets you change your mind should you decide that mortgage life insurance isn’t right for you.
To cancel, you can call your lender’s insurance helpline, complete a form at a branch, or send a written request by mail.
CMHC Insurance
What is mortgage insurance?
Mortgages with a down payment of less than 20% must be insured due to their higher risk level. This insurance protects the mortgage lender in case you default. Mortgage default insurance does not protect you or help you cover mortgage payments.
The largest provider of mortgage loan insurance in Canada is the Canada Mortgage and Housing Corporation (CMHC), which the Government of Canada owns. Some mortgage lenders allow you to go through a private mortgage insurer instead, such as Canada Guaranty or Sagen.
Is mortgage insurance mandatory?
Mortgage default insurance is required for mortgages with a down payment of less than 20% with a federally-regulated mortgage lender, such as a bank. If you make a down payment of 20% or larger, this requirement doesn’t apply. Mortgage default insurance premiums are added as a one-time lump sum onto your mortgage balance at closing, which means that you’ll be paying for it in your mortgage payments over the lifetime of the mortgage.
Unregulated lenders, such as private mortgage lenders, may allow you to get an uninsured mortgage with a down payment of less than 20%.
What mortgages does CMHC insurance not cover?
- The CMHC has eligibility requirements that limit the type of mortgages that can be insured.
- CMHC insurance will not cover homes costing $1 million or more.
- Mortgages with an amortization period over 25 years are also not eligible for CMHC insurance.
- Borrowers may still obtain CMHC insurance for mortgages with a down payment over 20%.
How much is CMHC insurance?
CMHC insurance premiums are calculated as a percentage of your mortgage and paid by your lender. Provincial sales tax is added to premiums for mortgages located in Ontario, Quebec, Manitoba. and Saskatchewan.
Premiums start at 2.4% of the mortgage amount for down payments of 20% or less, going up to 4% for a down payment of 5%. While your mortgage lender will pay the insurance premium, they usually indirectly pass this cost on to you. However, you may still save money by accessing the benefits of lower mortgage interest rates a common feature of insured mortgages.
To find out how much CMHC insurance would cost for your home, visit our CMHC insurance calculator.
CMHC Insurance Premiums
Down Payment
CMHC Insurance Premium
5% – 9.99%
4%
10% – 14.99%
3.1%
15% – 19.99%
2.8%
20% – 24.99%
2.4%
25% – 34.99%
1.7%
Greater than 35%
0.6%
Benefits of CMHC Insurance
CMHC insurance allows you to make a down payment as low as 5% of the property’s value for homes priced at less than $500,000, or 5% on the first $500,000 and 10% on the remainder for homes over $500,000 and less than $1 million. Since the mortgage is insured, mortgage lenders will often offer lower mortgage rates for these contracts.
Comparing Canadian and U.S. Mortgages
Whether you’re a Canadian snowbird looking to purchase a second home in Florida or planning on moving to the United States, there are differences between Canadian and U.S. mortgages.
Mortgage Terms
The most significant difference that Canadian borrowers will notice is the variation in mortgage terms. In the U.S., mortgage terms are usually for the entire life of the mortgage. Since U.S. mortgage terms are the same as the mortgage’s amortization period, the interest rate is set for the whole life of the mortgage and cannot be renegotiated.
Mortgage terms in the U.S. are commonly 30 years, while Canadian amortization periods are usually 25 years. Adjustable-rate mortgages are available in the U.S. that offer a fixed rate for a certain number of years and then become a variable rate for the remainder.
Mortgage Application Process
Cross-border U.S. mortgage applications take much longer to process than Canadian mortgages. That’s because American mortgages require more documentation and verification.
For Canadians looking to get an American mortgage, you’ll need to provide documents such as your Canadian tax returns, proof of Canadian citizenship or U.S. visa, Social Insurance Number or U.S. Social Security Number, proof of assets, and insurance documents.
You can use your Canadian assets and equity in your Canadian home, but they’ll be converted to U.S. Dollars when your application is considered.
U.S. mortgage applications take 45 to 60 days, while Canadian mortgages take 5 to 10 days to process on average. Although Canadian mortgages are more straightforward, ensure you have the proper documentation when applying.
Tax Deductible Mortgage Interest
Mortgage interest can be tax deductible in the U.S., but that’s not true in Canada. Canadian homeowners can use a legal tax strategy called the Smith Maneuver to make their mortgage interest tax deductible in Canada.
Mortgage Payment Frequency
Monthly mortgage payments are the most popular option in the U.S., and many lenders do not allow other mortgage payment frequencies. For example, Citibank, U.S. Bank, and TD Bank do not allow bi-weekly mortgage payments. Some lenders that allow biweekly payment plans may charge an additional fee.
Mortgage Prepayments
Many U.S. lenders allow you to make additional monthly mortgage payments, but many U.S. mortgages have mortgage prepayment penalties if you’re looking to pay your mortgage off in full. However, prepayment penalties are illegal for FHA, VA, and USDA loans. Lenders charging a prepayment penalty usually only contract this into the first few years of the loan; early redemption won’t carry any penalties outside that stipulated period.
In the United States, mortgage prepayment penalties are only allowed for the first three years of a mortgage loan. The penalty cannot be more than 2% of the mortgage loan balance for the first two years and no more than 1% in the third year.
There are six states that ban prepayment penalties for all mortgage loans:
- Alabama
- Maryland
- Alaska
- New Mexico
- Iowa
- Vermont
Other states ban prepayment penalties on certain mortgage loan types, such as those with a high interest rate, subprime, or with a certain balance. These include:
- New Jersey
- Minnesota
- Pennsylvania
- Indiana
- New York
- North Carolina
- Ohio
- Massachusetts
- Connecticut
- South Carolina
- Maine
Differences in Mortgage Defaults
If a borrower fails to meet their mortgage payments, a U.S. mortgage lender can choose to file a notice of default, which starts the foreclosure process. This notice of default is sent after 90 days of missed payments, with foreclosure beginning after 180 days.
Foreclosures and power of sales in the United States work similarly to those in Canada. Some states, such as California and Texas, use non-judicial power of sale, while others, such as New York and Florida, use judicial foreclosures.
Looking at Canada, power of sale is commonly used in Ontario, while foreclosures are seen more often in British Columbia, Quebec, and Alberta.
U.S. law requires a mortgage loan to be 120 days past due before foreclosure can begin. In Canada, no such law prevents a lender from starting foreclosure before a certain number of missed payments. For example, a foreclosure can begin in Alberta after one missed mortgage payment. In Manitoba, foreclosure can start after one month of missed mortgage payments. Canadian foreclosures usually have a set number of months that the borrower can fully repay the due amount to prevent the forced sale of their home. This period is usually six months.
In the United States, power of sale can start earlier than foreclosures. In California, it can begin after four months of missed mortgage payments.
Numeric Example: How much is the monthly mortgage on a $500,000 house?
Your monthly mortgage payments are determined by the amount of money you borrowed and your mortgage’s interest rate. The following table provides monthly payments on a $500,000 mortgage to reflect different interest rates.
Monthly Mortgage Payment on a $500,000 mortgage amortizing over 25 years (excluding any insurance premium)
Mortgage Interest Rate
2%
3%
4%
5%
6%
Monthly Installment
$2,117
$2,366
$2,630
$2,908
3,199
Disclaimer:
- Any analysis or commentary reflects the opinions of https://thelocalbroker.ca/ analysts and should not be considered financial advice. Please consult a licensed professional before making any decisions.
- The calculators and content on this page are for general information only. https://thelocalbroker.ca/ does not guarantee accuracy and is not responsible for any consequences of using the calculator.
- Financial institutions and brokerages may compensate us for connecting customers to them through payments for advertisements, clicks, and leads.
- Interest rates are sourced from financial institutions' websites or provided to us directly. Real estate data is sourced from the Canadian Real Estate Association (CREA) and regional boards' websites and documents.