1. What is Mortgage Interest Calculation?

The mortgage interest calculation determines the total amount of interest paid over the life of a mortgage loan. This helps borrowers understand the true cost of borrowing and compare different mortgage options.

2. How Does the Calculator Work?

The calculator uses the mortgage interest formula:

Where:

• \( EMI \) — Equated Monthly Installment (monthly payment in CAD)
• \( m \) — Number of months in the loan term
• \( P \) — Principal loan amount (in CAD)

Explanation: The formula calculates the total interest by subtracting the original principal from the total amount paid over the loan term.

3. Importance of Mortgage Interest Calculation

Details: Understanding total interest costs is crucial for financial planning, comparing mortgage offers, and making informed decisions about loan terms and prepayment strategies.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Why calculate total mortgage interest?
A: It helps borrowers understand the true cost of their mortgage beyond just the principal amount and compare different loan options effectively.

Q2: Does this calculation include other fees?
A: No, this calculation only includes the interest portion. Other fees like insurance, taxes, and closing costs are not included.

Q3: How can I reduce my total interest paid?
A: Making extra payments, choosing a shorter loan term, or securing a lower interest rate can significantly reduce total interest costs.

Q4: Is this calculation specific to Canadian mortgages?
A: While the formula is universal, this calculator is designed with Canadian currency and mortgage practices in mind.

Q5: What if I have a variable rate mortgage?
A: This calculator assumes a fixed interest rate. For variable rates, the calculation would be more complex and would require knowing the rate changes over time.