Purchasing a home is an exciting time for many Canadians. But with the purchase comes the responsibility of making regular mortgage payments. Understanding the terms of your mortgage, such as your amortization period, is key to properly budgeting for your home. Here are the steps to calculating your mortgage amortization in Canada.
- Determine your mortgage amount and interest rate
The first step to calculating your mortgage amortization is to figure out the amount of your mortgage and your interest rate. Your mortgage amount is the amount of money you have borrowed from the bank or other lender to purchase your home. Your interest rate is the rate of interest you will be charged on the loan.
- Calculate your monthly payment
Once you have determined your mortgage amount and interest rate, you can calculate your monthly payment. This is done by dividing the total mortgage amount by the number of months in the amortization period.
- Calculate the amortization period
Your amortization period is the length of time it will take you to pay off your mortgage. In Canada, the standard amortization period is 25 years. However, you can choose a shorter or longer amortization period, depending on your financial circumstances.
- Calculate the total amount of interest paid
Once you have determined your monthly payment and amortization period, you can calculate the total amount of interest you will pay over the course of the loan. To do this, multiply your monthly payment by the number of months in the amortization period. The result is the total amount of interest you will pay.
- Calculate the total amount of principal paid
Finally, you can calculate the total amount of principal you will pay over the course of the loan. To do this, subtract the total amount of interest from the total mortgage amount. The result is the total amount of principal you will pay.
By following these steps, you can easily calculate your mortgage amortization in Canada. Understanding your amortization period is key to budgeting for your mortgage payments.