Calgary Mortgage Calculator

About Calgary Mortgage Calculator (Formula)

The Calgary Mortgage Calculator helps to estimate the monthly mortgage payment based on the principal loan amount, annual interest rate, and loan term in years. The calculation uses the following standard formula for fixed-rate mortgages:

M=Pi(1+i)n(1+i)n−1M = P \frac{i(1 + i)^n}{(1 + i)^n – 1}M=P(1+i)n−1i(1+i)n​

Where:

• $M$ is the monthly mortgage payment.
• $P$ is the principal loan amount.
• $i$ is the monthly interest rate, calculated as the annual interest rate divided by 12 and then divided by 100 to convert the percentage to a decimal.
• $n$ is the number of monthly payments, calculated as the loan term in years multiplied by 12.

Steps to Calculate Monthly Mortgage Payment:

1. Convert the Annual Interest Rate to a Monthly Rate: i=Annual Interest Rate12×100i = \frac{\text{Annual Interest Rate}}{12 \times 100}i=12×100Annual Interest Rate​
2. Calculate the Total Number of Payments: $n=\text{Loan Term in Years}\times 12$
3. Apply the Formula: M=Pi(1+i)n(1+i)n−1M = P \frac{i(1 + i)^n}{(1 + i)^n – 1}M=P(1+i)n−1i(1+i)n​

Example Calculation:

Suppose you have:

• Principal loan amount $P=\$300,000$
• Annual interest rate $r=5\%$
• Loan term $t=25$ years

1. Convert Annual Interest Rate to Monthly Rate: i=512×100=0.004167i = \frac{5}{12 \times 100} = 0.004167i=12×1005​=0.004167
2. Calculate Total Number of Payments: $n=25\times 12=300$
3. Apply the Formula: M=300000×0.004167×(1+0.004167)300(1+0.004167)300−1M = 300000 \times \frac{0.004167 \times (1 + 0.004167)^{300}}{(1 + 0.004167)^{300} – 1}M=300000×(1+0.004167)300−10.004167×(1+0.004167)300​
4. Simplify and Calculate: M≈300000×0.004167×3.211443.21144−1M \approx 300000 \times \frac{0.004167 \times 3.21144}{3.21144 – 1}M≈300000×3.21144−10.004167×3.21144​ M≈300000×0.013372.21144M \approx 300000 \times \frac{0.01337}{2.21144}M≈300000×2.211440.01337​ $M\approx 300000\times 0.006044$ $M\approx \$1,813.41$

So, the monthly mortgage payment would be approximately $1,813.41.

This formula is essential for understanding how much you’ll need to pay each month for a fixed-rate mortgage, given the loan amount, interest rate, and term length.