1. What is the Mortgage Interest Formula?

The mortgage interest formula calculates the total interest paid over the entire mortgage tenure. It provides a clear picture of the additional cost beyond the principal amount borrowed for a Canadian mortgage.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( I \) — Total interest paid (CAD)
• \( EMI \) — Equated Monthly Installment (CAD)
• \( N \) — Number of monthly payments
• \( P \) — Principal amount (CAD)

Explanation: This formula calculates the total interest by multiplying the monthly payment by the total number of payments and subtracting the original principal amount.

3. Importance of Interest Calculation

Details: Understanding total interest costs helps borrowers make informed decisions about mortgage terms, compare different loan options, and plan their long-term financial strategy.

4. Using the Calculator

Tips: Enter the monthly payment amount in CAD, the total number of monthly payments, and the principal amount in CAD. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this formula work for all types of mortgages?
A: This formula works for fixed-rate mortgages where the EMI remains constant throughout the loan term.

Q2: How accurate is this interest calculation?
A: This calculation provides the exact total interest paid over the mortgage term for fixed-rate mortgages.

Q3: Does this include additional mortgage fees?
A: No, this calculation only includes the interest portion of your mortgage payments. It does not include insurance, taxes, or other fees.

Q4: Can I use this for variable rate mortgages?
A: This formula is designed for fixed-rate mortgages. For variable rate mortgages, the calculation would be more complex as the EMI may change over time.

Q5: How can I reduce my total interest payment?
A: Making additional principal payments, choosing a shorter loan term, or negotiating a lower interest rate can help reduce total interest costs.