Mortgage Calculator

Types of mortgages

There are various types of mortgages available. Fixed-rate mortgages have an interest rate that remains constant throughout the loan term, protecting borrowers from increased payments if interest rates rise. Variable-rate mortgages have rates tied to market interest rates, which can result in lower or higher payments depending on market conditions. Hybrid mortgages combine both approaches with an initial fixed rate followed by variable rate.

Down payment

Down payment is the amount buyers pay from their own savings when purchasing a property. Banks typically require a minimum of 20% of the property value, though some offer programs with lower down payments (5-10%) with additional insurance. A higher down payment means a smaller loan amount, lower risk for the bank, and often better interest rates. Additional costs to consider include notary fees, commissions, and insurance.

Fixed vs variable rate

Choosing between fixed and variable rates depends on individual risk tolerance and interest rate forecasts. Fixed rates provide certainty and budget planning, but are usually higher than initial variable rates. Variable rates can be beneficial during periods of low interest rates but carry the risk of increased payments. Many experts recommend considering a partial fixed rate for the first few years of the loan.

Loan amortization

Amortization is the process of paying off a loan over time. Initially, most of the payment goes to interest and less to principal. Over time, this proportion reverses. Longer loan terms (e.g., 30 years) mean lower monthly payments but higher total interest costs. Shorter terms (15-20 years) have higher payments but lower total cost. Consider making extra payments during favorable financial periods to shorten the repayment term.