As a home buyer, there are many valuable resources available to help you make informed decisions throughout the entire home buying process. One of the most useful tools you’ll find are nesto’s online mortgage calculators. There are different types available, but a good place to start is with the Mortgage Payment Calculator. This enables you to calculate your estimated monthly mortgage payment alongside the corresponding amortization schedule.
Calculating mortgage payments is no longer a difficult task thanks to nesto. This is vital information that should be contemplated before you even start home shopping so that you understand what you can comfortably afford.
Our Mortgage Payment Calculator allows you to input information such as the home’s purchase price, your anticipated down payment, the interest rate and amortization period as well as payment frequency. You can also play around with the variables to see how specific changes will impact your monthly mortgage payment amount.
Mortgage payment calculator
What is a mortgage payment?
A mortgage payment is the amount of money paid each month to pay down, and eventually pay off, the amount you borrowed. Typically represented as one sum, a mortgage payment is made up of two main components – principal and interest. If you require mortgage default insurance (mandatory when you have less than a 20% down payment), this amount may also be included in your payment. (See: ‘What is CMHC insurance’ below for more details.) Mortgage payments can typically be paid weekly, bi-weekly, semi-monthly or monthly.
How to estimate mortgage payments
In order to estimate your mortgage payment, you simply need to gather some key information. This includes the amount of the mortgage (the purchase price of the house, minus your down payment, plus mortgage insurance if applicable), the interest rate you anticipate paying or have already been offered, and the amortization period (the number of years the payments will be spread across broken down into months). Although there’s a mathematical equation for determining your mortgage payments manually, it’s much easier to let nesto’s Mortgage Payment Calculator do the work for you.
Tip: Although there’s a mathematical equation for determining your mortgage payments manually, it’s much easier to let nesto’s Mortgage Payment Calculator do the work for you
How to use nesto’s Mortgage Payment Calculator
nesto’s Mortgage Payment Calculator provides you with an accurate calculation of your mortgage payments so you’ll be properly prepared and understand your financial obligations as a homeowner. You can play around with the information and test various scenarios by entering different amounts in the fields provided such as your down payment or interest rate. You can change the size of your down payment and the payment frequency or see how much a change in interest rate can greatly impact your payments.
Key factors that can affect your mortgage payments (location, amount, fixed vs variable)
There are a number of factors that can affect your mortgage payment, and most of these are within your control:
- Credit score – an assessment of your creditworthiness the higher the score, the better
- Home location – rural vs urban; and established vs gentrified
- Home price – a higher purchase price requires a larger down payment
- Loan amount – the more you borrow, the higher your mortgage payments
- Down payment – the more you put down, the lower your mortgage payments (down payments under 20% require mortgage default insurance)
- Interest rate – the higher the rate, the larger your payments
- Interest type – fixed rates and variable rates take turns being a better deal, although variable rates have historically saved borrowers the most money over time
How to lower your mortgage payment
If you’re finding it difficult to make your monthly mortgage payments, or if you’re simply looking to lower your recurring household costs, there are several options to explore to bring down your monthly mortgage amount. Use nesto’s Mortgage Payment Calculator to see what your payment would be in different scenarios as you consider the following:
- Extending the duration of your mortgage term
- Making a larger down payment
- Finding a lower mortgage rate
- Renting out part of your home to offset your mortgage costs
- Refinancing your mortgage at a lower interest rate
- Downsizing to a smaller, less expensive home
Tip: If you’re finding it difficult to make your monthly mortgage payments, or if you’re simply looking to lower your recurring household costs, there are several options to explore to bring down your monthly mortgage amount
Ways to pay off your mortgage faster
While not always feasible or in your best interest depending on your financial situation, there are some steps you can take to help pay off your mortgage faster, which can potentially save you thousands of dollars in interest and reduce the amount of time you carry mortgage debt.
Here are some ways you can pay off your mortgage quicker:
- Increase the amount of your payments. Even a small amount will go a long way, such as rounding up your current payment
- Make a lump sum payment if you come into money, receive a tax refund, get a bonus, etc (Many mortgages have annual limits for making extra payments, so be sure you know your limit)
- Accelerate your payments by switching to a more frequent plan (eg, monthly to bi-weekly or bi-weekly accelerated)
- Shorten the amortization period, which will raise your payments
- Continue paying the same amount at renewal even if interest rates are lower
Important: There are several steps you can take to help pay off your mortgage faster, which can potentially save you thousands of dollars in interest and reduce the amount of time you carry mortgage debt
What is CMHC insurance?
Offered by Canada’s national mortgage insurance provider, Canada Mortgage and Housing Corporation (CMHC), mortgage default insurance is a requirement for all mortgages with down payments of less than 20%. The insurance represents a security for your lender and protects them in case you’re unable to make your mortgage payments.
There are also two private mortgage default insurance companies in Canada – Genworth Financial and Canada Guaranty.
Mortgage default insurance is calculated as a percentage of the loan and is based on the size of your down payment. The higher the percentage of the total home purchase price and amount that you borrow, the higher percentage you’ll pay in insurance.
Mortgage insurance is payable upon closing, or it can be rolled into your monthly mortgage payments. This latter option makes it subject to interest, so it’s important to make sure you understand what each option involves from a financial perspective.
What is an amortization schedule?
The term ‘amortization’ refers to the amount of time it’ll take to pay off your mortgage. A common amortization period is 25 years. An amortization schedule is a record that shows the life of the amortization period and the ongoing reduction of the mortgage with each payment you make up until there is a zero balance.
Starting with the amount of the original loan, the schedule displays each payment amount, the amount of interest on each payment – including a breakdown of how much is principal and how much is interest – as well as the balance owing after each payment has been made so you’ll be able to see your progress as you work towards becoming mortgage free.
How nesto works
We offer all the help of a mortgage broker, without the commission. Simply put, our salaried mortgage advisors are rewarded based on your satisfaction. We’re here to help you reach your goal and guide you through the complicated world of home financing. #yesyoucan #empowermentisthenewsexy
Every mortgage professional knows the market’s best rates every time they check their email. Only a few of them will give you that rate without making you work for it. nesto’s here to change the industry for this very reason. You always get the best rate upfront with nesto.