How Much Will a $100,000 Mortgage Cost You
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Home prices in Canada have seen significant increases in recent years. Along with interest rates, this higher cost of homeownership has left many Canadians with undeniable concerns about the long-term affordability of committing to a mortgage.
Some parts of Canada still offer affordable housing options, allowing you to keep your mortgage low and monthly payments manageable. If you’re considering a mortgage of $100,000, it’s essential to understand what the monthly borrowing costs may look like, as well as the total costs over the life of the loan.
Our post will guide you through these essential considerations, answering questions about the cost of monthly repayments and the amount of interest you will pay on the mortgage, based on various interest rate scenarios and the amortization period.
Key Takeaways
- Monthly payments on a $100,000 mortgage will vary depending on the interest rate and the amortization.
- The total interest paid over the life of a $100,000 mortgage is influenced by changes in interest rates throughout the mortgage’s life and the amortization period.
- Choosing a longer amortization means you will pay more interest over the life of your mortgage, but have smaller monthly mortgage payments.
Monthly Payments for a $100K Mortgage
Monthly payments on a $100,000 mortgage will depend on several factors, including your interest rate and the amortization.
A mortgage calculator like nesto’s can help you estimate payments based on these variables. Typically, your mortgage payment consists of both the principal amount and interest.
If you put down less than 20% as a down payment, your mortgage will include mortgage default insurance, unless you pay with cash, which is not added to your mortgage.
By paying for your mortgage insurance with cash, you can take advantage of the lower insured mortgage rates without amortizing it throughout your mortgage. Additionally, with most lenders, you have the option to include property taxes as part of your mortgage payment, which will be collected and remitted on your behalf.
- For example, using nesto’s current 5-year fixed rate of 3.89%, your monthly payment on a 100K mortgage with a 25-year amortization would total around $520, while a 30-year amortization would be approximately $469. This lower amount is due to the principal being spread out over an additional 5 years. However, keep in mind that you will pay more in interest-carrying costs the longer your amortization period.
Note: Your payment amount may vary depending on the mortgage term, amortization schedule, and payment frequency you selected when obtaining your mortgage.
Here’s what monthly payments may look like for you based on a few different interest rate scenarios (rounded to the nearest dollar):
| Interest Rate | Monthly Payment (25-Year Amortization) | Monthly Payment (30-Year Amortization) |
|---|---|---|
| 3.00% | $473 | $421 |
| 3.25% | $486 | $434 |
| 3.50% | $499 | $448 |
| 3.75% | $513 | $461 |
| 4.00% | $526 | $476 |
| 4.25% | $540 | $490 |
| 4.50% | $553 | $504 |
| 4.75% | $567 | $519 |
| 5.00% | $582 | $534 |
| 5.25% | $596 | $549 |
| 5.50% | $610 | $564 |
| 5.75% | $625 | $579 |
| 6.00% | $640 | $595 |
Where to Find the Best Rates on a $100K Mortgage
Securing the best interest rate on your mortgage can significantly affect your total monthly costs. A great place to start is to compare offerings from different banks and lenders. This can be done by visiting the websites of various banks and lenders, using online comparison tools like nesto’s comparison page, or consulting a mortgage expert directly.
Prime lenders (some of whom are A lenders) will often have the best rates to offer. However, you must meet the strict qualifying criteria of these lenders to obtain the best rates. Subprime lenders (B and private lenders) often have higher interest rates compared to prime lenders. These lenders are typically better suited for individuals with more equity in the subject property, self-employed income, or those who need assistance meeting the qualifying criteria of prime lending.
Private (also known as syndicate) lenders loan money directly to borrowers as investors and set their own terms, conditions, and rates for the mortgage. Interest rates tend to be higher than those of prime and subprime lenders, but they offer mortgages to those who require a non-income-qualifying (NIQ) solution.
Remember that the lowest rates don’t always mean the best deal. Consider other features and benefits, such as prepayment options, porting privileges, and any restrictions that could result in a hefty penalty if you prepay or pay off your mortgage before the term ends.
Total Interest Paid on a $100K Mortgage
The total interest you’ll pay on a $100,000 mortgage over its lifetime can be considerable.
Using nesto’s current 5-year fixed rate of 3.89% and a 25-year amortization, you would pay approximately $18,091 in interest over a 5-year term. If you consider the entire 25 years, assuming your interest rate remains constant, that figure increases to $56,022.
However, if you opt for a 30-year amortization to lower your monthly payments, you would pay approximately $18,399 in interest over the 5-year term and $68,953 over the entire 30 years, assuming your interest rate never changes.
How to Apply for a $100K Mortgage
The application process for a $100,000 mortgage with nesto typically involves the following steps:
- Prepare Documents: Gather all the necessary documents, including proof of income, bank statements, and identification.
- Visit: https://www.nesto.ca/online-mortgages-brand/
- Complete the application: Don’t include an address for the property unless you have already located one. A prequalification can be obtained when the subject property is not confirmed. Include details from the MLS listing if you have found a property where your offer is accepted. A nesto sales development representative (SDR) may reach out to you at this point to help you with your application.
- Book a meeting: An expert at nesto will speak with you to understand your financial situation and match it to the most suitable mortgage solution for your needs. After meeting with an expert, a nesto processor will be assigned to help you fully complete or update any documentation needed to take your application to the finish line.
- Approval: You’ll receive firm or conditional approval of financing from Nesto.
- Provide additional documentation: Include any missing information, such as your realtor’s and solicitor’s contact details. Your nesto processor will contact you to assist you in completing your mortgage application.
- Instructions are sent to your solicitor or notary.
- Your notary or solicitor will confirm any outstanding closing costs, including your downpayment, land transfer taxes, title insurance/search/survey/land transfer office fees, and legal fees.
- You’ll book an appointment to sign with your solicitor.
- You’ll receive the keys to your new home on your closing date.
Frequently Asked Questions
What is the monthly mortgage payment on a $100,000 mortgage?
Monthly mortgage payments on a $100,000 mortgage will depend on the interest rates when you obtain the mortgage and the amortization period you select. For example, using principal and interest only, a $100k mortgage with a 5% interest rate and a 25-year amortization would have monthly payments of approximately $582.
If you put down less than 20% as a downpayment, you will also need to factor in mortgage default insurance. This insurance will be included in your mortgage payment, though you can pay the amount upfront in full to avoid adding it to the mortgage. You may also choose to include property taxes as part of your mortgage payment that the lender will collect and remit on your behalf.
What income do you need for a $100,000 mortgage in Canada?
The income required for a $100,000 mortgage will vary based on how much debt you already carry, how much you have saved for a downpayment, and current interest rates.
The best way to determine the income you need is to calculate your debt-to-income ratios. The general rule of thumb is that you can afford 3 to 4x your income as a mortgage with a 20% downpayment.
Income Needed = (monthly payment + taxes/12 + $100 for heating + condo fees/2)*12/0.39*
Your stress-tested monthly payment is based on your contract rate +2% over 25 or 30 years.
The 0.39* factor is changed to 0.35 whenever you use 30 years for the amortization or have a 20% downpayment to contribute to your home purchase.
How can I find the best rate for a $100,000 mortgage?
Finding the best rate for a $100,000 mortgage is best done by comparing offerings from different banks and lenders. You can do this by using comparison tools or consulting a mortgage expert. nesto makes it easy to compare mortgage rates in your province or territory.
Are there any hidden costs with a $100,000 mortgage?
While there are no hidden costs with a $100,000 mortgage, there are additional costs besides the monthly mortgage payment you will make. Other monthly expenses include recurring costs such as property taxes, home insurance, and mortgage default insurance.
One-time costs you’ll need to consider may include home appraisal and inspection fees, land transfer taxes, moving expenses, and closing costs. It’s recommended that you set aside between 1.5% and 4% of the purchase price for closing costs, depending on the province in which the property is located.
Final Thoughts
Understanding the full impact of a $100,000 mortgage, including not only the monthly costs you expect but also the total interest you will pay over the life of the loan, can help you fully realize the implications and costs of taking on a mortgage.
Contact nesto mortgage experts today for the best rates on your mortgage.
Why Choose nesto
At nesto, our commission-free mortgage experts, certified in multiple provinces, provide exceptional advice and service that exceeds industry standards. Our mortgage experts are non-commissioned, salaried employees who provide impartial guidance on mortgage options tailored to your needs and are evaluated based on client satisfaction and advice quality. nesto aims to transform the mortgage industry by providing honest advice and competitive rates using a 100% fully digital, transparent, seamless process.
nesto is on a mission to offer a positive, empowering and transparent property financing experience – simplified from start to finish.
Contact our licensed and knowledgeable mortgage experts to find your best mortgage rate in Canada.
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