- Canadian mortgages compound semi-annually by law — a different effective rate than a US mortgage at the same nominal rate, which typically compounds monthly.
- Extra payments go entirely to principal, so paying down early compounds savings over the life of the loan.
- The prepay-vs-invest comparison shows whether paying down your mortgage early or investing the difference wins at your assumptions.
- This calculator uses the same amortization engine as Hunch's in-app mortgage planner.
How the mortgage calculator works
Enter your current mortgage balance, interest rate, and regular payment. The calculator amortizes the loan forward — applying each payment first to interest, then to principal — to project your exact payoff date and the total interest you'll pay over the life of the loan.
Add an optional extra payment amount to see how much time and interest it saves. Because extra payments reduce principal immediately, the savings compound: an extra $200/month early in a 25-year mortgage typically saves far more interest than the same $200/month added in year 20.
The math: Canadian semi-annual compounding
Canadian law requires fixed-rate mortgages to compound semi-annually, not in advance — the quoted annual rate is split into two 6-month periods before being converted to a monthly rate for payment calculations. A 5% nominal annual rate works out to a slightly higher effective annual rate (about 5.06%) once compounded.
This differs from the US convention, where mortgages typically compound monthly — so a 5% nominal rate in Canada and a 5% nominal rate in the US aren't quite the same loan. The calculator always uses the Canadian convention, since that's the legally mandated method here.
Worked example
Say you have a $450,000 mortgage at 5.25%, amortized over 25 years, with monthly payments. The calculator projects a monthly payment of roughly $2,690 and total interest of about $356,000 over the full term.
Add a $200 extra payment every month, and the picture changes: the mortgage is paid off about 4 years earlier, saving roughly $65,000 in interest, for about $48,000 in total extra payments. That's the kind of trade-off the prepay-vs-invest comparison is built to surface.
Key terms
- Amortization
- The schedule of payments that pays off a loan over time, with each payment split between interest and principal.
- Semi-annual compounding
- The Canadian-mandated method of compounding mortgage interest twice a year before converting to a monthly rate — required by the Interest Act for fixed-rate mortgages.
- Principal
- The amount you actually borrowed (or still owe), as opposed to the interest charged on top of it.
- Prepayment
- Any payment beyond your required regular payment, applied directly to principal — most Canadian mortgages allow a limited amount of prepayment per year without penalty.