Canadian mortgage & home-finance calculators

What makes a Canadian mortgage different

Canada has one feature no other market on this site shares, and it is buried in the maths rather than the paperwork.

Fixed rates compound semi-annually, not monthly. By law, a Canadian fixed-rate mortgage is quoted on a semi-annual compounding basis, while variable rates compound monthly. That means a Canadian 5% fixed and an American 5% fixed do not produce the same payment, and any calculator that treats them alike is wrong. It is a small difference per month and it compounds across a full amortisation.

The term and the amortisation are separate numbers. Elsewhere, a 25-year mortgage usually means a 25-year commitment. In Canada you amortise over 25 years and commit for a term of five, then renew at whatever the market offers. So a Canadian borrower faces the same repricing risk as a British one, on a longer cycle.

Mortgage insurance is mandatory below 20% down, and it is not optional or cancellable. CMHC insurance protects the lender, is paid by you, and is usually added to the principal rather than paid monthly. Unlike US PMI it does not fall away at a loan-to-value threshold, so it is a permanent cost of having borrowed with a smaller deposit.

You are tested against a rate you will not pay. The OSFI B-20 stress test requires lenders to qualify you at the greater of your contract rate plus two percentage points or a floor rate, whichever is higher. Your affordability is therefore calculated on a payment larger than your actual one, which is why the amount you are offered can look conservative against your income.

Two ratios, not one

Canadian lenders apply two service ratios rather than a single debt-to-income figure. Gross Debt Service covers housing costs alone: mortgage payment, property tax, heating and half of any condo fees. Total Debt Service adds every other monthly obligation.

Both are tested and the binding one is whichever you fail first. That matters practically, because a borrower with modest housing costs and significant other debt fails on TDS while their GDS looks comfortable, and the fix is to clear the other debt rather than to shop for a cheaper house.

Land transfer tax, which is not one tax

There is no national purchase tax. Land transfer tax is provincial, the rates and bands differ by province, and Toronto levies a municipal tax on top of Ontario's, so a Toronto buyer pays it twice.

Several provinces offer first-time buyer rebates with their own thresholds, and Quebec's regime differs again. This is why a single Canadian figure does not exist and why the calculator asks which province you are buying in before it will give you a number.

What the rate follows

Variable rates track the Bank of Canada policy rate directly, so a policy change reaches a variable-rate borrower quickly. Fixed rates are priced off Government of Canada bond yields of matching maturity, which move on expectations rather than on announcements.

One consequence worth knowing: mortgage interest is not deductible against income tax for an owner-occupier in Canada, unlike in the US. Comparisons that assume a deduction do not apply here.

Where the calculators fit

The mortgage calculator applies semi-annual compounding for fixed rates and monthly for variable, because the distinction is statutory rather than cosmetic. The affordability calculator runs both GDS and TDS and applies the B-20 stress test. The CMHC calculator gives the premium by loan-to-value band and whether it is added to the principal. The land transfer tax calculator holds each province's bands, plus Toronto's municipal layer, each checked against the provincial source and dated.

Every figure is computed from the underlying formula rather than repeated from another site, and every statutory value carries the date it was last verified.