# How Much Will a \$1,000,000 Mortgage Cost You

Written by
| Feb 13, 2024
Reviewed by
| Mar 5, 2024
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With rising home prices and interest rates across Canada in recent years, many Canadians have been concerned about the long-term affordability of having a mortgage. If you’re considering taking out a \$1 million mortgage, it’s important to understand how much you’ll be paying each month and throughout the life of the loan.

In this post, we’ll answer your questions on what monthly payments you may need to make on a \$1 million mortgage and the total interest you could pay based on interest rate scenarios and typical amortization terms.

### Key Takeaways

• The amount you will pay monthly on a \$1 million mortgage will depend on the Interest rate and the amortization period.
• The total interest paid can be substantial on a \$1,000,000 mortgage, influenced by interest rates over the life of the mortgage and the amortization selected.
• The longer the amortization period, the more you will pay in interest over the life of the mortgage.

### Best Mortgage Rates

Fixed
Variable
in

0.00%3 Year Fixed

0.00%5 Year Fixed

## Monthly Payments for a \$1 Million Mortgage

Monthly payments on a \$1,000,000 mortgage will depend on several factors, including your interest rate and the amortization. With most lenders, you may have the option to include property taxes as part of your mortgage payment, which will be collected and remitted on your behalf.

A mortgage calculator like nesto’s can help you estimate payments based on these variables. Typically, your mortgage payment will comprise the principal amount and interest.

With mortgages of \$1 million or more, you must put down at minimum 20% of the purchase price as a downpayment, and you will not be eligible for a default-insured loan.

• For example, using nesto’s current 5-year fixed rate of 5.39%, your monthly payment on a \$1 million mortgage with a 25-year amortization would total around \$6,040, while a 30-year amortization would be approximately \$5,572. This lower amount is due to the principal being spread out over an extra 5 years, but keep in mind that you will pay more in interest-carrying costs the longer your amortization.

Note: Your payment may differ depending on your mortgage term, amortization, and payment frequency selected when you obtain 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):

## Where to Find the Best Rates on a \$1 Million 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 various bank and lender websites, using online comparison tools like nesto’s comparison page, or consulting a mortgage expert directly.

Remember that the lowest rates don’t always mean the best deal. Consider other features and benefits like prepayment options, porting privileges, and any restrictions that could see you incur a hefty penalty if you prepay or pay off your mortgage before the term ends.

## Total Interest Paid on a \$1 Million Mortgage

The total interest you’ll pay on a \$1,000,000 mortgage over its lifetime can be considerable.

Using nesto’s current 5-year fixed rate of 5.39% and a 25-year amortization, you would pay approximately \$252,808 in interest over a 5-year term. If you look at the full 25 years, assuming your interest rate never changes, that figure balloons to \$812,011.

However, if you opt for a 30-year amortization to lower your monthly payments, you would pay approximately \$256,825 over the 5-year term and \$1,005,910 over the entire 30 years, assuming your interest rate never changes.

## How to Apply for a \$1 Million Mortgage

The application process for a \$1,000,000 mortgage with nesto typically involves the following steps:

1. Prepare Documents: Gather all the necessary documents, including proof of income, bank statements, and identification.
2. Find a mortgage lender or visit https://www.nesto.ca/online-mortgages-brand/
3. 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.
4. Book a meeting: an expert at nesto will speak to 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.
5. Get approved – you’ll get firm or conditional approval of financing from nesto.
7. Receive instructions – instructions are sent to your solicitor or notary.
8. Pay outstanding costs – 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.
9. Sign on your mortgage – you’ll book an appointment to sign with your solicitor.

### What is the monthly mortgage payment on a \$1,000,000 mortgage?

Monthly payments on a \$1,000,000 mortgage will vary depending on the interest rate and how long you choose to amortize the loan. You may also include property taxes as part of your mortgage payment. The lender will collect and pay these taxes on your behalf.

With mortgages of a million or more, you are required to put down 20% as a downpayment and will not be eligible for a default-insured loan.

For example, if you use principal and interest only to calculate your monthly payments, you would pay approximately \$5,816 monthly on a \$1 million mortgage with a 5% interest rate and a 25-amortization.

### What income do you need for a \$1,000,000 mortgage in Canada?

The income required for a \$1,000,000 mortgage will depend on several factors, such as how much debt you currently have, how much money you have saved up for a down payment, and current interest rates. Calculating your debt-to-income ratio is the easiest way to determine the income required. Generally, you can afford 3 to 4 times your income with a down payment of 20%.

Income Needed = (monthly payment + taxes/12 + \$100 for heating + condo fees/2)*12/0.39*

Your monthly payment is based on a rate of +2% over 25 yrs or 30 yrs.

The 0.39* factor is changed to 0.35 whenever you use 30 years for amortization or have a 20% downpayment to contribute to your home purchase.

### How can I find the best rate for a \$1,000,000 mortgage?

You can find the best rates by comparing offerings from different banks and lenders, using online comparison tools, or consulting with a mortgage expert. nesto makes it easy to compare mortgage rates in your province or territory.

### Are there any hidden costs with a 1,000,000 mortgage?

There are no hidden costs associated with a \$1,000,000 mortgage. However, you should keep a few things you’ll need to consider beyond the mortgage principal and interest you will pay. These include monthly and recurring costs like property taxes and home insurance. One-time expenses you may need to budget include home appraisal and inspection fees, land transfer taxes, moving expenses, and closing costs.

You should prepare to budget 1.5% – 4% of the purchase price for closing costs depending on where the property is located.

## Final Thoughts

Understanding the full impact of a \$1,000,000 mortgage, not only what you expect as monthly costs but also how much interest you will pay over the life of the loan, can help you realize the full implications and costs of taking on a mortgage.

Contact nesto’s mortgage experts today for the best rates on your mortgage.

In just a few clicks, you can see our current rates. Then apply for your mortgage online in minutes!

### Best Mortgage Rates

Fixed
Variable
in

0.00%3 Year Fixed

0.00%5 Year Fixed