Advertisement
Are you thinking about buying a home, or renewing or refinancing your mortgage? These tools can help you understand the financial implications of mortgages.
Owning real estate is a goal for many Canadians, and while it can be a rewarding investment, it comes with financial responsibilities that you must carefully manage. First and foremost, you need to be able to calculate your mortgage payments, down payment, penalty fees and other costs. Online mortgage calculators simplify the process tremendously. Just enter your information and let the calculators do the work.
Together, the mortgage calculators on MoneySense offer a comprehensive view of the costs of buying a home, breaking down key information about your mortgage payment and related expenses, including taxes, insurance, utilities and maintenance costs. Hopefully they will help you make an informed home buying decision and feel confident about your financial future.
If you want to buy a home, the first step is knowing how much of a mortgage you can afford. You’ll start by evaluating your borrowing capacity, which will become the foundation of your budget.
The mortgage affordability calculator on MoneySense does this for you. Simply input your annual income, expenses, debt payments and living costs to determine the home value that is considered to be at the top of your budget. The calculator will also show you the size of your mortgage for a home of that value (hence, why it’s called a mortgage affordability calculator). Our tool has a handy “cash needed” tab, which assists in accurately calculating closing costs—another significant expense when purchasing a home.
Note that the mortgage affordability calculator requires you to input your down payment amount. If you don’t know how much you have or need for a down payment, check out the mortgage down payment calculator below.
The calculator should answer all your affordability-related questions. However, the Financial Consumer Agency of Canada (FCAC) and the Canada Mortgage Housing Corporation (CMHC) also have tools on their site that are worth checking out. Just be aware that FCAC and CMHC apply different debt-to-income ratios in their models.
If you’re buying a home—especially if you’re a first-time home buyer—start with a mortgage affordability calculator. Understanding your borrowing capacity and cash requirements empowers you to find a home that fits your financial situation.
When you buy a home, you are required to have an initial sum of money to put towards the house. This is referred to as your down payment. The mortgage down payment calculator on MoneySense will tell you exactly how much money you need, based on the value of the home you wish to purchase.
Your down payment affects other important aspects of your home purchase, such as the amount you can borrow for your mortgage, the size of your mortgage payment, and whether you have to pay for mortgage default insurance (more on that below). Once calculated, the down payment is typically expressed as a percentage. It is the dollar value of the down payment divided by the price of the home.
Understanding the long-term financial implications of a home mortgage, particularly the cumulative impact of interest, can be complicated. A mortgage payment calculator is an essential tool to help you make informed home buying decisions. It helps you estimate your regular mortgage payments based on the home’s purchase price, down payment size, loan interest rate and amortization.
A reliable mortgage payment calculator provides a comprehensive overview of your expected payments, including the total interest you’ll pay over the mortgage term. Additionally, many other housing expenses, such as property taxes, land transfer taxes, and the need for mortgage default insurance, are directly linked to the size of your mortgage and the home’s value.
The mortgage payment calculator on MoneySense helps you understand your mortgage payments, including the required closing cash and monthly carrying expenses you will need to buy the home you want.
If you buy a home with less than a 20% down payment in Canada, you must get mortgage default insurance (sometimes, referred to as mortgage insurance). Unlike home insurance, which covers property damage, mortgage default insurance protects the lender if something happens and you can no longer make your mortgage payments. In Canada, this type of insurance is provided by three institutions: CMHC, Sagen and Canada Guaranty.
The mortgage insurance calculator on MoneySense calculates how much you will pay for mortgage default insurance. Your premium is based on the loan-to-value ratio (LTV) of your home.
Based on this ratio, the insurance premium falls between 2.8% and 4% for down payments below 20%. While a down payment higher than this may exempt you from purchasing mortgage insurance, the lender might still require it in certain situations. To use the tool, enter the asking price and down payment amount, and it will provide an estimate of your mortgage insurance premium.
A one-time fee called a land transfer tax (or land transfer fee) must be paid whenever a property changes hands. The charge is levied by the provincial and territorial governments and/or local municipalities.
Land transfer tax—which must be paid in cash—is in effect across all regions except Alberta, Saskatchewan and the three territories. In these areas, a much smaller land transfer fee is imposed instead. If you’re purchasing in Toronto or Montreal, you’ll pay municipal land transfer tax in addition to provincial land transfer tax.
The land transfer tax calculator on MoneySense is the easiest way to determine what you’ll pay in taxes and fees when buying a property in any Canadian province or territory. The tool considers the property’s location and purchase price, as well as any first-time home buyer rebates that may apply.
Refinancing your mortgage comes at a cost, but it can save you money if done right. The mortgage refinance calculator helps you weigh the pros and cons of refinancing by estimating the fees you’ll pay for breaking your mortgage agreement, while also showing you what your new mortgage payment will be under revised terms.
You may want to refinance your mortgage to get a better mortgage rate or consolidate debt into a mortgage loan. When you refinance your mortgage, you break your current contract and negotiate a new one with the same lender or a new one. However, doing this before your mortgage is up for renewal can result in prepayment penalty fees.
Based on the information you enter, the mortgage refinance calculator provides three valuable points for home owners considering a refinance:
If you want to break your mortgage early in order to move to a new place or secure a better mortgage rate, you’ll have to factor in the penalty that comes with it. This penalty amount depends on several factors, such as the date you signed your original mortgage contract, the terms of your contract, the balance on your mortgage, and the mortgage rate and type of mortgage rate that you currently have.
The type of mortgage rate you have is a significant factor in determining the penalty. For fixed-rate holders, the penalty is typically the greater of the interest rate differential or three months of interest. On the other hand, variable-rate holders only pay three months of interest.
The mortgage penalty calculator on MoneySense uses your mortgage information to find your estimated prepayment penalty. The tool also displays how the penalty was calculated.
To use the tool, you’ll need to provide the start date of your mortgage, the current mortgage term, the type of interest rate, the name of your mortgage provider, the current mortgage rate, the mortgage balance, and the province where the property is located.
When your mortgage is up for renewal, you can stick with your current lender or explore other options for better interest rates or terms. The mortgage renewal calculator on MoneySense can simplify the process by comparing different mortgage offers, helping you select the most suitable one available at the time of renewal.
Here’s how the mortgage renewal calculator works: Input the mortgage amount you want to renew, the home’s location, and the size of your down payment (expressed as a percentage of the home’s value). You will have to pick an amortization period, a mortgage payment frequency and a mortgage interest rate from the options presented. (The calculator automatically identifies the best mortgage rates provided by different lenders across Canada.) To get a clearer picture of your monthly mortgage costs after renewing, the tool allows you to consider other expenses on top of the mortgage payment, like utility bills, home insurance and condo fees.
Using a mortgage renewal calculator makes it easy to determine whether your current mortgage is still the right fit for you or if it’s time to find a more suitable option.
The decision between renting and buying is substantial. While it may spark emotional considerations, the ultimate choice should be grounded in a thorough numerical analysis.
The New York Times provides a good example of the level of analysis needed with its renting vs. buying calculator. The tool considers a ton of different factors, including the home’s purchase price, how long you expect to live there, the returns you could get if you invested the money instead, and much more. One caveat: The calculator was built for the Times’ American users, and the housing market in Canada is different in significant ways.
Which is where the rent vs. buy calculator created by Benjamin Felix, a portfolio manager and head of research at PWL Capital, comes in. His tool—a good ol’ Google Sheet—helps you compare buying and renting options using the 5% rule. This rule stipulates that if you can rent for 5% or less than what it would cost to buy a home, you might be better off renting. If you’re leaning towards continuing to rent, remember to include the cost of tenant insurance in your budget.
These online mortgage calculators enable you to approach home ownership with confidence, knowledge and a well-informed mindset. However, it is imperative to note that while calculators are an excellent aid, we always recommend that you seek professional advice when managing such complex financial matters.
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
Which ETFs should you invest in? Which ones best suit your risk tolerance? What about personal ethics? Check out...
The Trump effect and Trumponomics, Shopify’s huge earnings beat, it’s sunny days for Suncor shareholders and more.
Here’s how to get your free ticket to attend two MoneyShow virtual expos.
Should you be paid as a power of attorney? Learn about the compensation rules in Ontario and how to...
The oilsands giant will return all excess cash to shareholders after hitting debt target early.
You started investing in your 20s, and you feel pretty good about doing it. But now what? Consider impact...
Shopify reports third-quarter net income of USD$828 million, and its executives aren’t concerned about how Trump’s election win will...
Here are the best accounts to hold your savings and investments.
Want an idea of how much tax you paid—or will be paying—for 2024? Here are the federal and provincial...
