Formally, a mortgage is a legal agreement by which a bank (or another mortgage lender) lends a debtor money in exchange for taking the title of the debtors property. The bank holds this title until the debt is fully repaid.

Generally, the mortgage payment consists of four components: principal, interest, insurance, and taxes. The inseparable part of a mortgage is the interest, which is the cost of a loan for the debtor and the remuneration for the bank. In other words, we can say that a mortgage is a kind of a personal loan that the bank gives you to help you buy a house. The characteristic feature of each mortgage is setting the collateral on the real estate the debtor buys. It means that if the debtor is unable to pay monthly instalments, the bank takes ownership of the house.

Calculating your Mortgage Payments

Understanding your mortgage is one of the most vital steps in figuring out your home ownership costs. Calculating your monthly expenses helps inform whether it's more financially prudent to buy or rent the home of your interest.

After gaining a high level understanding of your monthly expenses, we recommend working with a mortgage broker to help you get a more accurate estimate of how much you will be paying for your home loan, and the best way to go about get pre-qualifed for a mortgage approval.

This mortgage payment calculator will help you estimate your monthly mortgage payments and costs:

Mortgage Calculator

How to Decrease Your Monthly Payments

If the monthly mortgage payment you’re seeing in the mortgage payment calculator is higher than you can afford, here are four things you can do to lower it:
  • Improve your credit score: If a low credit score is contributing to your high payments, you can take steps to increase it. Firstly, take the time to review your credit report and address any red flags or errors that might be bringing your score down. Then, stop applying for new credit, work to reduce your debt, and ensure that you are making all of your payments on time.
  • Increase your down payment: A larger down payment amount will reduce the amount of money you need to borrow, leading to lower monthly payments. It can also help you qualify for a lower interest rate, which can also lower your monthly payments. In some cases, it can help you avoid paying costly mortgage insurance.
  • Make extra payments: If you can’t make a bigger down payment, you can opt to pay extra towards your principal every month. While this won’t immediately lower your monthly mortgage payment, it can help your mortgage payments decrease later and help you pay off the loan faster
  • Opt for a longer loan term: A longer loan term will spread the cost over a longer period of time, which will lower your monthly mortgage payments. This will lead to more interest paid over the lifetime of your loan, but it’s a good strategy to help make homeownership more affordable.

Please note that the Mortgage Payment Calculator results are based on the information you provide and are for illustrative and general information purposes only. The calculator is not intended to provide specific financial or other advice, and should not be relied upon for this purpose. Interest rates are subject to change without notice. You should speak with us before making a final decision on a mortgage loan.