Remaining Mortgage Balance Calculator Canada

Mortgage Balance Formula:

\[ Balance = P \times \frac{(1+r)^n - (1+r)^p}{(1+r)^n - 1} \]

Principal Amount (P):

Annual Interest Rate:

Amortization Period:

years

Months Paid (p):

months

Remaining Mortgage Balance:

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1. What is the Mortgage Balance Formula?

The Canadian mortgage balance formula calculates the remaining principal amount owed on a mortgage after a certain number of payments have been made. It accounts for the amortization schedule and interest compounding.

2. How Does the Calculator Work?

The calculator uses the standard Canadian mortgage formula:

\[ Balance = P \times \frac{(1+r)^n - (1+r)^p}{(1+r)^n - 1} \]

Where:

$ P $ — Original principal amount ($)
$ r $ — Monthly interest rate (annual rate ÷ 12)
$ n $ — Total number of monthly payments (amortization period × 12)
$ p $ — Number of payments made

Explanation: The formula calculates the outstanding balance by determining how much of the principal would remain after p payments in an n-payment amortization schedule.

3. Importance of Mortgage Balance Calculation

Details: Knowing your remaining mortgage balance is crucial for refinancing decisions, prepayment planning, understanding home equity, and financial planning for property transactions.

4. Using the Calculator

Tips: Enter the original mortgage amount, annual interest rate, amortization period in years, and number of monthly payments made. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How often is interest compounded in Canadian mortgages?
A: Most Canadian mortgages use semi-annual compounding, but for calculation purposes, we use monthly compounding which provides a close approximation.

Q2: Does this calculator account for prepayments?
A: This calculator shows the scheduled balance. Additional prepayments would result in a lower actual balance than calculated.

Q3: What if I have a variable rate mortgage?
A: This calculator assumes a fixed interest rate. For variable rates, you would need to calculate separately for each rate period.

Q4: How accurate is this calculation?
A: This provides a close approximation. For exact figures, consult your mortgage statement or lender.

Q5: Can I use this for mortgage refinancing decisions?
A: Yes, this helps estimate your current mortgage balance, which is essential information when considering refinancing options.