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True North Mortgage Payment Calculator

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For today, {date}, nesto’s {term}-year {type} mortgage rate is {bps} bps ({bps_percent}) lower than the similar average at Canada’s Big 6 Banks. On a {mortgage_ammount} mortgage over a {amortization_period}-year amortization, with nesto your monthly payment would be {nesto_monthly_payment}, saving you up to {monthly_savings} on your monthly payment. This equals {savings_interest} in interest saved while allowing you to pay down {extra_payment} extra on principal over your term.

As a homebuyer, many valuable resources are available to help you throughout the homebuying process. Online mortgage calculators, such as the True North mortgage calculator, are one of the most valuable tools for homebuyers, helping you quickly calculate various payments without complicated manual number crunching. 

An online mortgage payment calculator will help you estimate mortgage payments alongside a corresponding amortization schedule.

Mortgage Industry Insights: May 2024

Bank of Canada Rate Announcement

The latest Bank of Canada (BoC) announcement on April 10th left the policy interest rate unchanged at . The decision to hold rates came as the BoC cited that inflation remains high and risks remain a top concern. While inflation has eased, the growth in shelter costs, particularly rent and mortgage interest costs, is currently the largest contributor to inflation remaining elevated.

The Governing Council cited that they need to see evidence of sustained downward momentum in inflation. However, a rate cut is within the realm of possibility at the next announcement as long as sustained easing of inflation continues.

The next announcement will be held on June 5th and bond markets are pricing in a high probability of a 25 basis point rate cut. However, without sustained or further reductions to core inflation, the Bank may decide to leave the key rate unchanged once again.

Real Estate Market Update

The Canadian Real Estate Association (CREA) released its home sales data for April on May 15th. The data showed that home sales have declined 1.7% since March.

April’s home sales activity has brought current activity down to a bit lower than the 10-year average. However, new listings increased 2.8% month-over-month. Slower sales are attributed to boosting the number of properties on the market to the highest level since just before the onset of the pandemic.

Prices have stagnated across most markets except for Calgary, Edmonton, and Saskatoon, where prices have been on a steady climb since last year. Composite prices have declined 0.9% year-over-year, marking the first decline since last July.

CPI Inflation Update

The latest inflation data by Statistics Canada on April 16th showed the Consumer Price Index (CPI) rose 2.9% year-over-year in March, up from 2.8% in February. Gasoline prices were the highest contributor to the year-over-year increase, as fuel prices rose faster in March. Gasoline prices increased 4.5% after a 0.8% increase in February. This sharp increase in prices is attributed to higher prices at the pumps due to supply concerns, geopolitical conflict, and continued voluntary production cuts.

Shelter prices continue to be a large driver of inflation in March, with mortgage interest costs and rent contributing the most to the 6.5% increase of this component. Mortgage interest costs rose 25.4% year-over-year in March after increasing 26.3% in February. Rent prices increased 8.5% year-over-year following an 8.2% gain in February. Rental increases can be attributed partially to the higher interest rate environment creating barriers to homeownership.

Inflation is expected to remain around 3% throughout the first half of 2024, with the Bank of Canada predicting it will return to the 2% target in 2025. 

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How to Calculate Your True North Mortgage Payments

To get started with an online mortgage calculator in Canada, you will need to input some details about your home purchase, including the asking price, downpayment, amortization, and payment frequency. Depending on your downpayment, the calculator will also show you if mortgage default insurance (CMHC) is required and how much you will pay for the premium. 

Asking Price (New Purchase Only): Enter the home’s purchase price here.

Current Property Value (Refinance and Renewal Only): Enter the current value of your home here if you are looking to refinance or renew. 

Mortgage Balance (Refinance and Renewal Only): Enter the remaining balance on your mortgage here if you want to refinance (your remaining balance should include any additional amount for your equity takeout if applicable) or renew. 

Province (Refinance and Renewal Only): Enter the province where the property is located. 

Downpayment (New Purchase Only): Enter the amount you saved for a downpayment here, or enter the percentage you wish to put down on the home.

Amortization Period (New Purchase Only): This is the time it takes to pay off the mortgage, typically 25 or 30 years, depending on the downpayment amount. Enter the length of time you want to take to pay off your mortgage completely. 

Remaining Amortization (Refinance or Renewal Only): Enter the remaining time on your mortgage here. For refinances, you could increase your amortization back to 25 or 30 years without impacting your mortgage rate.

Payment Frequency: This is how many times per month you wish to make mortgage payments. You can choose monthly, semi-monthly (2x a month),  bi-weekly (every 2 weeks), and weekly. You can also accelerate payments by choosing accelerated weekly or bi-weekly to speed up the time it takes to pay off the mortgage. 

Mortgage Rate (Optional): If you don’t have a rate yet, you can use the pre-selected rate or enter your rate here if you have already been offered one. Multiple factors determine your preselected rate, but most importantly, your transaction type (purchase/renewal/refinance) and your loan-to-value (LTV) ratio make the biggest impact.

Annual Property Taxes (Optional): Enter the annual property taxes for the property if you wish to estimate your total mortgage payments, including property taxes. This is useful for budgeting purposes. 

Monthly Condo/Maintenance Fees (Optional): If you are purchasing a condo, add the monthly maintenance fee here to estimate total mortgage payments, including the maintenance fee. This is useful for budgeting purposes.

Example Calculation of a $500,000 True North Mortgage in Canada

To calculate True North mortgage payments without the use of an online calculator, you can use the formula:

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]

M is your True North mortgage payment. It will be monthly, semi-monthly, bi-weekly, or weekly. 

P is your True North mortgage principal: This is your total mortgage amount after deducting your downpayment. If you put down less than 20% as a downpayment, you must add your mortgage default insurance premium to the mortgage amount if you do not plan to pay it upfront in cash. 

You can find out your premium by calculating your loan-to-value (LTV) ratio and using the chart from CMHC to locate the premium. Once you know the percentage, you can calculate the premium as follows: 

Premium Amount = (Mortgage Amount – Downpayment) x Premium

i is your True North mortgage interest rate: This will be the interest rate you have been offered. 

Monthly interest rate / 12

Semi-monthly interest rate / 24

Bi-weekly interest rate / 26

Weekly interest rate / 52

n is your number of True North payments: This will be the number of payments over the amortization period.

Monthly payments x 12

Semi-monthly x 24

Bi-weekly x  26

Weekly x 52

For example, to manually calculate True North monthly mortgage payments on a $500,000 mortgage using an interest rate of 4.79% and a 25-year amortization, you would use the following inputs:

P = $500,000

i = 0.0479

n = 300

M  = 500,000 [(0.0479/12)(1 + (0.0479/12))^300 ] / [ (1 + (0.0479/12))^300 – 1 ]

M = 500,000 [0.00399166666(1.00399166666)^300] / [1.00399166666^300 – 1]

M = 500,000 [0.00399166666(3.3039420973)] / [3.3039420973 – 1]

M = 500,000 [0.0131882355] / [2.3039420973]

M = 500,000[0.0057242044]

M = 2862.10 (rounded) 

Your True North monthly mortgage payment would be approximately $2,862.10. 

Today’s Best Mortgage Rates as of May 17, 2024

What is a True North Mortgage Payment?

A mortgage payment is a recurring set amount of money paid at regular intervals to pay down your mortgage balance and eventually pay this balance off in full. It has two main components: principal and interest. The mortgage payment is specific to the amortization period and the term during which the rate is guaranteed. 

True North offers variable-rate mortgages (VRM), where the payment stays constant. Interest costs cannot be estimated as the interest-carrying costs for the term will fluctuate based on changes in interest rates. This could affect the principal amount paid during the term and possibly the amortization over the life of the mortgage. 

True North also offers adjustable-rate mortgages (ARM), another type of variable mortgage where payments may fluctuate. In an ARM, the mortgage rate won’t stay constant for the life of the mortgage, possibly not even for the term, so interest costs can only be estimated. Changes in the mortgage payment will not impact your amortization schedule if you choose an ARM.

Interest costs can be easily calculated for fixed-rate mortgages where the principal and interest remain constant for the term. Since there are no rate fluctuations, once you’ve locked in, you will know exactly how much you will pay in principal and interest during your term. 

If your downpayment is less than 20% of the purchase price or property valuation, you must account for high ratio default insurance premiums as part of your mortgage payment amount. You can avoid this by paying the premium upfront in cash or making a downpayment of 20% or more to avoid the insurance. 

Mortgage Default insurance is provided by one of Canada’s 3 high ratio default insurers, Canada Mortgage Housing Corporation (CMHC), Sagen (GE) or Canada Guaranty (CG). It is only available for properties with a purchase price or valuation under $1 million. If you plan on purchasing a home over $1 million, you must make a downpayment of 20% or more for a conventional mortgage.

Factors That Can Affect Your Mortgage Payments at True North

Several factors can affect your mortgage payments at True North. These include:

  • Credit Score: Depending on the mortgage solution and lender, a minimum score between 680 and 720 is needed to get the best rates. 
  • Subject Property Location: Residental mortgage rates apply only to residentially zoned properties. 
  • Purchase Price or Valuation: A higher borrowed amount means higher mortgage payments. A higher downpayment will lower your borrowed amount and make qualifying easier. 
  • Loan Amount: The loan amount will be net of any downpayment made before any applicable default insurance premiums are added. A minimum downpayment of 5% is required on the first $500,000 purchase price/valuation, and 10% is required on any remaining amount over $500,000. A 20% downpayment on the full amount is required if the purchase price/valuation is $ 1,000,000 or more. 
  • Downpayment: A higher downpayment will reduce the loan amount and lower mortgage payments. 
  • Interest Rate: Higher interest rates will mean larger mortgage payments. Interest rates will change based on mortgage amount as the ratio of the purchase price/home valuation (known as loan-to-value (LTV) ratio).  
  • Amortization Period: The longer the amortization period selected, the lower mortgage payments will be, but you will pay more in interest over the life of the loan. The shorter the amortization period, the higher mortgage payments will be, but you will save on interest-carrying costs over the life of the loan. 
  • Loan-to-Value (LTV) Ratio: The LTV determines mortgage eligibility and will affect the interest rate offered and the mortgage default insurance premium. A higher LTV ratio means a higher mortgage payment. 

How to Lower Your True North Mortgage Payment

There are a few options available to reduce your mortgage payments. You can extend your current amortization or make a prepayment, allowing you to re-amortize to the original remaining amortization after the prepayment is made. If you find a lower mortgage rate and the penalty to break your current term is less than the cost savings, you could early renew or refinance your mortgage.     

Ways to Pay Off Your True North Mortgage Faster

Paying off your True North mortgage faster may not always be possible or in your best interest, depending on market conditions and your financial situation. However, some steps you can take could save you thousands in interest and help reduce the time it takes to pay off your mortgage. 

Prepayment privileges allow you to make extra payments directly to your mortgage’s principal portion. Many prepayment options are available with limitations set based on the lender and mortgage solution. Overall, any prepayments on your mortgage will save you time (reduced amortization) and money (interest), helping you become mortgage-free faster. 

There are several ways to take advantage of prepayments, including: 

  • Lump Sum Payments: These can be made as a single lump sum payment once a year at any time, on the anniversary date of the mortgage, or in the form of multiple smaller lump sum payments throughout the year as long as you do not exceed your lender’s allowable amount and schedule.  
  • Double-Up Payments: This option allows you to automate the lump sum payments to double up and match your regularly scheduled payments. 
  • Increase Regular Payments: Depending on the lender, you can increase your regular mortgage payments by the percentage of the allowable prepayment privilege each year, on or before your anniversary date. For example, if you have a 10% prepayment privilege, you can increase your regular mortgage payments by 10% once a year. 
  • Payment Frequency: While technically not a prepayment privilege, this option allows you to accelerate your weekly or bi-weekly payments, reducing your amortization by a few years and reducing interest-carrying costs. You will have the semi-monthly payment amount applied 26 times a year for accelerated bi-weekly payments. In comparison, accelerated weekly payments are half the semi-monthly amount applied 52 times a year. 

Frequently Asked Questions About Your True North Mortgage Payment

How do I use a True North mortgage payment calculator?

To use a mortgage payment calculator True North, start by choosing the type of mortgage (new, refinance, renewal). Then, fill out the mortgage details (asking price, downpayment, amortization, payment frequency, interest rate, optional taxes, fees, etc.). 

The True North mortgage calculator will provide a payment summary that breaks down the total mortgage payment based on the frequency you selected, the amount of mortgage default (CMHC) insurance that will be added to the mortgage amount (if required) and the principal and interest paid over the term and amortization.  

The amortization schedule tab will show you a breakdown of the total principal and interest paid and the remaining mortgage balance for the end of each year.

What is an amortization schedule at True North?

An amortization schedule is the life of the mortgage. This is the total time it takes to fully pay off the principal and interest on the borrowed amount. Amortizations are up to 25 years on mortgages with down payments of less than 20%, while mortgages with down payments of more than 20% can typically go up to 30 years or more, depending on your choice of mortgage solution and lender. 

Amortization schedules will help you see your progress toward becoming mortgage-free. At any point during the period, you can see what portion of each mortgage payment goes toward the principal and interest. Once you reach the half-life of your mortgage, you’ll notice that a higher proportion of your payment goes to your principal.

How does my income impact my mortgage payment at True North?

Borrowers’ income is one key factor that lenders use to determine how much they are willing to lend you for a mortgage. Lenders do this using debt service ratios, which show them whether you have the capacity to take on more debt and repay the mortgage. 

The gross debt service ratio (GDS) is the amount of your pre-tax income that would be spent on household debts. They will look at the mortgage payment, property taxes, heating, and 50% of condo or maintenance fees (if applicable). Typically, the maximum allowable GDS ratio is 32% for uninsured mortgages and 39% for insured mortgages. 

The total debt service ratio (TDS) is the pre-tax income you would spend to service all debts. In addition to the debts that make up the GDS ratio, TDS will also account for student or car loans, child or spousal support, and credit card or line of credit payments that you may have. Typically, the maximum allowable TDS ratio is 40% for uninsured mortgages and 44% for insured mortgages.

How do I calculate my monthly payment on a True North mortgage?

To calculate monthly mortgage payments, an online mortgage payment calculator is the easiest way to provide a quick estimate. To do a manual calculation, you must go through a few steps. 

For example, if you purchase a home for $600,000 and put down $100,000, you will need a mortgage of $500,000. You’ve been offered an interest rate of 4.79% and have decided to go with a 25-year amortization.  

You will use the following formula to calculate mortgage payments; however, you will first need to convert a few numbers to be able to perform the calculations. 

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]

Step 1: Determine your interest rate as a decimal. You can do this using the following:

Interest Rate = (annual interest (%) / 100) 

Interest Rate = 0.0479

Step 2: Determine the number of payment periods. You can do this using the following:

Payment Periods: amortization years x 12 months

Payment Periods: 25 x 12

Payment Periods: 300

Step 3: Now you’re ready to do the manual calculation using the formula. 

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]

M (mortgage payment) = unknown

P (principal) = $500,000

i (monthly interest) = 0.0479 

n (number of payments) = 300

Remember to divide the interest rate by 12 in the formula to get the monthly interest rate.

M  = 500,000 [(0.0479/12)(1 + (0.0479/12))^300 ] / [ (1 + (0.0479/12))^300 – 1 ]

M = 500,000 [0.00399166666(1.00399166666)^300] / [1.00399166666^300 – 1]

M = 500,000 [0.00399166666(3.3039420973)] / [3.3039420973 – 1]

M = 500,000 [0.0131882355] / [2.3039420973]

M = 500,000[0.0057242044]

M = 2862.1022 (rounded to $2,862.10)

What’s the difference between a high-ratio borrower and a low-ratio borrower at True North?

A high-ratio borrower puts down less than 20% as a downpayment and has a loan-to-value (LTV) ratio of 80% or more. This type of borrower will require mortgage default insurance. A low-ratio borrower puts down more than 20% as a downpayment and has an LTV of less than 80%. This type of borrower will not require mortgage default insurance.

What is the most common mortgage payment schedule at True North?

The most common mortgage payment frequency at True North is the monthly payment. This is typically the default payment option, where mortgage payments are made once per month or 12 times a year.

Do people most commonly choose a 5%, 10% or 20% downpayment at True North?

The most common downpayment depends on the borrower. Most first-time homebuyers (FTHB) will opt for the minimum downpayment option available, which is 5% on the first $500,000 and 10% on the remaining amount between $500,000 and $999,999. For borrowers in large cities where home prices are well above $1 million, a 20% downpayment or more would be required.

What else can you use the True North mortgage calculator for?

You can use the True North mortgage calculator instead of a True North loan or True North personal loan calculator to determine your True North loan payment by reducing the amortization to 5 or 7 years to match your loan.

What is True North mortgage affordability?

True North mortgage affordability is used to determine your capacity to carry a mortgage at True North. True North uses debt service ratios known as gross debt service (GDS) and total debt service (TDS) to calculate your qualifying mortgage amount. These ratios will be limited based on your credit score, loan-to-value (LTV) ratio and other factors. You can also use nesto’s mortgage affordability calculator to find out your capacity to carry a mortgage, or use the True North mortgage affordability calculator.

What differentiates True North Mortgage’s Think Financial mortgage payments?

True North Mortgage’s in-house lender, Think Financial, offers a very low rate and mortgage payment on their special 6-month mortgage. Be sure this special rate mortgage is suitable for your financial circumstances before you choose it, as it comes with a 1% fee if you do not renew with them after your initial 6-month term finishes.  

Why use a calculator to analyze a True North mortgage?

Using a True North calculator or nesto’s mortgage payment calculator can help you find out exactly how much interest-carrying costs you can save by making small changes to your mortgage. Increasing your mortgage payment or mortgage payment frequency can shave years off your mortgage, making you mortgage-free faster.

What mortgage types does True North provide?

True North provides many types of customizable mortgages that fit your financial circumstances. True North works with various lenders and banks who register their mortgages as standard and collateral charges. Although higher legal costs exist to set up and payout collateral charges, the benefits allow you to hold various mortgage products. The main benefit of a collateral charge is that it will enable you to have a combination of mortgage solutions, such as hybrid fixed/variable mortgages, to suit your needs.

You can hold a home equity line of credit (HELOC), which is a revolving line of credit secured to your property’s value. It allows you to borrow up to 65% of your property’s value as one or more revolving credit line(s). You could use a True North line of credit calculator or any calculator that allows you to determine compound interest.

You can hold one or more home equity loans, which are essentially mortgages with shorter amortization periods. These can be used to purchase a car or recreational vehicle, renovate your property, purchase investments, or for other shorter-term goals.

How nesto works

At nesto, all of our commission-free mortgage experts hold concurrent professional designations from one or more provinces. Our clients will receive the best advice and care when they speak with specialists that exceed the industry status quo. 

Unlike the industry norm, our agents are not commissioned but salaried employees. This means you’ll get free, unbiased advice on the most suitable mortgage solution for your unique needs. Our advisors are measured on the satisfaction and quality of advice they provide to their clients. 

nesto is working hard to change how the mortgage industry functions. We start with honest and transparent advice, followed by our best rates upfront. We can offer you these low rates using the fintech industry’s best-in-class and safest technology to provide a 100% digital online experience and process to reduce overhead costs.

By working remotely across Canada, all our mortgage experts and staff spend less time commuting to work and more time with their friends and family. This makes for more dedicated employees and contributes to our success with happy and satisfied clients.

nesto is on a mission to offer a positive, empowering and transparent property financing experience, simplified from start to finish.

Reach out to our licensed and knowledgeable mortgage experts to find your best mortgage rate in Canada.

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