Estimate your monthly payment for the next term from the balance at maturity, the renewal rate and the amortization you have left.
Use this calculator when your renewal statement arrives, or a few months earlier if you can estimate your balance at maturity. Enter the balance at the end of your current term, the rate you are offered and the remaining amortization, which is the number of years left to pay the mortgage off completely, not the length of the new term.
How it works. The calculator uses the standard instalment formula with semi-annual compounding, as is usual for Canadian fixed-rate mortgages: payment = balance x r / (1 - (1 + r)^-n), where r = (1 + annual rate / 2)^(1/6) - 1 is the monthly rate and n is the number of months left. Most Canadian fixed-rate mortgages are compounded semi-annually, as the Interest Act requires the rate to be disclosed on a yearly or half-yearly basis, so the result should be close to your lender's figure. Variable-rate mortgages are often compounded monthly, so for those the result will be slightly low.
Worked example (illustrative). A $500,000 mortgage taken in 2021 at 1.99% over 25 years had a payment of about $2,115 and a balance of about $418,763 after five years. Renewing at 4.29% over the 20 years left gives about $2,594 here, roughly $480 a month more.
Limits. The yearly balance table assumes the same rate for the whole amortization, which will not happen, so treat it as a guide to how fast the balance falls. Read the payment and the balance at the end of the first five years rather than the lifetime totals. Defaults are illustrative, not current rates.
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