How to calculate mortgage payments in Canada (2025)

Whether you're buying your first home or renewing an existing mortgage, understanding how lenders calculate your payments empowers you to make better decisions. In Canada, most mortgages use the same underlying formula to determine periodic payments based on the loan amount, interest rate, amortization period and payment frequency.

1. The amortization formula

The standard mortgage payment formula is:

Payment = P × r × (1+r)ⁿ ÷ [(1+r)ⁿ − 1]

Where:

• P = principal (the amount you're borrowing)
• r = periodic interest rate (annual rate ÷ number of payments per year)
• n = total number of payments (payments per year × amortization years)

This formula ensures your payment is the same every period during the term. At the start, most of the payment goes toward interest; over time, more goes toward principal. By the end of amortization, the loan is fully repaid.

2. Payment frequency matters

Common payment options include monthly (12 payments/year), semi‑monthly (24), bi‑weekly (26) and weekly (52). The more frequently you pay, the smaller each payment — but you'll make more payments per year. Bi‑weekly and weekly schedules reduce the interest slightly compared to monthly because the principal declines more often.

3. Accelerated bi‑weekly and weekly

Accelerated schedules increase the payment amount so that you effectively make an extra monthly payment each year. For example, to get an accelerated bi‑weekly amount, take the monthly payment, multiply by 12 and divide by 26. Accelerated options reduce your amortization period and total interest significantly.

4. Interest rate and amortization

Your annual interest rate is the rate in your mortgage agreement. Lenders quote five‑year fixed, variable and adjustable rates based on the Bank of Canada prime rate. The amortization period is how long it would take to pay off the mortgage at the current rate (often 25 or 30 years). A longer amortization lowers payments but increases total interest.

5. Try our Mortgage calculator

Instead of crunching the formula yourself, use our Mortgage calculator. Enter the purchase price, down payment, annual interest rate and amortization length. You can compare monthly, bi‑weekly and accelerated bi‑weekly payments instantly. The results show your payment amount, total interest paid and a compact amortization table.

The calculator helps you see how a slightly higher payment (via accelerated schedules) can save thousands in interest and pay off your mortgage years sooner. It also handles unusual frequencies like semi‑monthly and weekly.

6. Compare scenarios

Mortgage rates and amortization periods can change at renewal. Use the calculator to compare scenarios: shorter amortizations vs. lower payments, and fixed vs. variable rates. Run "what if" situations to understand how rate changes or lump-sum prepayments affect your schedule.

By understanding the math behind mortgage payments and using our tools, you'll be better equipped to negotiate terms with your lender and choose a payment schedule that matches your budget and financial goals.