Interest rates:
the impact most people never model
On a $400,000 loan, the gap between 4% and 6% is more than $110,000 in interest over 25 years. Model your scenario in real time.
The interest rate may be the most underestimated factor in a mortgage. Most people focus on the monthly payment — fewer grasp how much they will pay in total interest over the life of the loan.
In Canada, rates compound on a semi-annual basis (not monthly), which changes the math compared to the United States. This calculator uses the correct Canadian convention.
Mortgage payment calculator
Adjust the inputs — results update instantly.
home The property
percent The loan
compare_arrows Rate type
Monthly payment
Amount borrowed
$320,000
Total interest
$249,626
Total cost
$569,626
Principal vs interest
Over the full amortization — every dollar you pay back.
Balance over time
How your loan shrinks year by year
What if your rate were different?
Same loan at ±1% and ±2% from your current rate.
💡 Accelerated bi-weekly payments
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Fixed vs variable: which should you choose?
There is no one-size-fits-all answer — it depends on your situation, risk tolerance, and the economic backdrop.
Concrete example
On a $400,000 mortgage amortized over 25 years (300 payments), ignoring insurance and closing costs, a fixed rate of 4.50% works out to about $2,223/month, while a variable rate of 3.95% is about $2,100/month — roughly $123/month lower to start. If variable rates rise, the payment follows. Use the calculator above for your real numbers.
Fixed rate
Your rate is guaranteed for the full term, regardless of what the Bank of Canada does. You often pay a bit more upfront — but you buy peace of mind.
- check_circleSame payments for the whole term
- check_circleEasier budgeting
- check_circleStrong fit when rates are low and you want to lock in
- cancelHigher prepayment penalty if you break the term early
- cancelOften slightly higher than variable at origination
Often fits
First-time buyers, tight budgets, anyone who values certainty.
Variable rate
Your rate follows the prime rate — it can rise or fall during the term. Historically, some variable borrowers have paid less interest over the long run.
- check_circleOften lower than fixed at the start
- check_circleTypically lower prepayment penalty (often ~3 months’ interest)
- check_circleYou benefit automatically when rates fall
- cancelPayments can increase if rates rise
- cancelLess predictable for monthly cash flow
Often fits
Stable income, higher risk tolerance, or plans to pay down the mortgage faster.
The Canadian twist: semi-annual compounding
In Canada, mortgage rates are quoted with semi-annual compounding — not monthly like many U.S. loans. It sounds technical, but it changes your payment.
The Canadian formula
At 5% quoted, the effective monthly rate is 0.4124% (not 5%÷12 = 0.4167%). The gap is small but adds up over 25 years.
What it means in practice
This calculator uses the correct Canadian convention.
What drives the rate you’re offered
Your mortgage rate is not the same for everyone. Here is what lenders weigh.
Credit score
760+ typically unlocks the best rates. Below ~680, expect higher rates or stricter terms.
Credit score guide →Down payment
20% or more is usually conventional, often with better rates. Under 20% requires CMHC (or equivalent) insurance; the rate can still be competitive because the loan is insured.
Down payment guide →The lender you choose
Banks, credit unions (e.g. Desjardins), online lenders, and alternative lenders — rates differ a lot. Shopping several sources can save you roughly 0.25%–0.5%.
Ask us a question →Term length
A 5-year fixed term is the most common in Canada. Shorter terms (1–2 years) sometimes offer lower rates but mean renewing more often.
Economic backdrop
The Bank of Canada’s policy rate drives variable mortgages. Fixed rates track more closely to 5-year government bond yields.
Debt ratios
GDS and TDS well inside lender limits strengthen your negotiating position. A strong file means more choice — and often a better rate.
GDS/TDS guide →Stress test: the qualifying rate
To approve you, lenders stress-test your file using the higher of:
Example: at a 5% offered rate, you may need to qualify at 7%. Your true borrowing room is lower than this payment calculator suggests — GDS/TDS use the stress rate, not the sticker rate.
Illustrative example
The stress test can reduce purchasing power by about 15–20% versus using the actual contract rate alone.
Five practical ways to get a better rate
Improve your credit before you apply
760+ vs ~680 can mean 0.25%–0.50% on the rate. On a $400,000 mortgage, that can be tens of thousands over 25 years. Review credit 6–12 months ahead.
Shop lenders — or use a mortgage broker
Do not stop at your branch. Brokers work with many lenders and may secure pricing you will not get on your own. You typically do not pay the broker — the lender does.
Increase your down payment if you can
Moving from 5% to 20% removes CMHC premiums for most purchases and can improve your rate profile. Less lender risk can mean better terms.
Pay down debt before you apply
A lower TDS (for example under ~35%) is a strong signal. Less debt means less risk — and a cleaner file. Focus on balances that count heavily in TDS.
Pick the right term for the cycle
When rates are high and cuts are expected, a shorter term (1–2 years) can beat locking a 5-year fixed. When rates are very low, a longer fixed term can hedge against increases.
Questions about your rate?
Email us your situation — income, down payment, credit — and we will give straight, general feedback on what you might expect.
Keep reading
Credit score
How your score directly affects the rate you are offered.
GDS / TDS
The thresholds that decide whether you qualify.
Down payment
How down payment size affects rate and CMHC premiums.
Current rates
See a quick snapshot of today’s fixed and variable market rates.