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Canadian Financial, Real Estate and Mortgage Glossary
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|Synonyms:||interest calculation, mortgage calculation, mortgage payment calculator|
|Notes:||CanEquity's mortgage calculator has been rated number one by the Globe and Mail.|
Definition of mortgage calculator
- mortgage calculator
- 1. A computer program that allows an individual to find out what kind of mortgage they can qualify for or to easily compare differences in the cost of a mortgage when one changes mortgage terms, interest rates, payment schedules, pre-payments, or down payment sizes.
Mortgage calculators are tools that help borrowers predict the size of their mortgage payments, as well as their amortization schedules. These calculators, which can be found online, allow home buyers to figure out their payments and schedules with a minimum amount of financial information, thereby doing away with complicated mathematics. The information required to use a mortgage calculator includes your mortgage amount, term, interest rate, amortization and payment schedule. Mortgage calculators provide borrowers with information concerning the size of their payments, the number of payments, the amount of principal and interest that will have to be paid off and differences due to amortization. Mortgage calculators can also show borrowers how much they will have to pay in lump sums, prepayments and accelerated payments in order to pay off a mortgage.
Canadian mortgage calculators differ greatly from American mortgage calculators because interest rates in Canada are compounded semi-annually. This means that interest can only be compounded twice a year, and that all payments must be in arrears. Canadian mortgage lenders cannot charge borrowers interest at the beginning of the month, or prior to the borrower having use of their money.
Related Terms and Acronyms:
- amortization Amortization refers to the process of gradually paying down the principal of a loan. Each payment toward the principal reduces your loan by that amount. This is different than an interest-only loan payment where the principal balance is never reduced. Amortization for a mortgage loan in Canada is normally 25 years, but can be as few as 5 years.
- amortized loan A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal.
- compound interest Interest that is calculated by adding the interest earned in the current period to the principal and figuring the next period's interest on this "compounded" total amount.
- compounding method Used in Bank rate tables. These include: S--Simple interest. A--Compounded annually. H--Compounded semi-annually. Q--Compounded quarterly. M--Compounded monthly. D--Compounded daily.
- conventional mortgage A mortgage that is not insured or guaranteed by CMHC or GE Capital.
interest (IN, int)
Money paid for the use of borrowed funds, usually expressed as an annual percentage.
➥ Bank account transaction code.
- interest rate (IR) The rate a lender charges an individual to borrow money.
The interest rate on a mortgage loan.
➥ You can compare mortgage rates using this website by clicking 'Rates' above.
- term The length of time you commit to repay a lender or bank at an agreed upon interest rate and payment schedule. The interest rate usually remains constant during this term unless the commitment states otherwise. For example, a five year fixed rate mortgage has a term of five years.