How It Works

Mortgage Payment Formula

Our mortgage calculator uses the standard amortization formula recognized by all lenders:

This formula calculates constant monthly payments where each payment covers the month's interest on the remaining balance, with the rest applied to principal.

PMI Calculation

PMI (Private Mortgage Insurance) is automatically calculated when your LTV exceeds 80%:

• PMI Rate: 0.5% of loan amount annually (conservative estimate)
• Monthly PMI = loanAmount × 0.005 / 12
• PMI removal: when balance drops to 80% of original home value

Actual PMI rates vary from 0.2% to 2%+ depending on credit score, LTV, and insurer. Our calculator uses 0.5% as a representative middle estimate.

Biweekly Payment Formula

Biweekly payments use a separate formula — not simply half of the monthly payment:

There are 26 biweekly periods per year (52 weeks ÷ 2), so the rate is annual rate ÷ 26.

Canadian CMHC Insurance

CMHC mortgage insurance premiums are added to the loan balance when the down payment is under 20%:

• 5.00–9.99% down: 4.00% of mortgage amount
• 10.00–14.99% down: 3.10% of mortgage amount
• 15.00–19.99% down: 2.80% of mortgage amount
• 20%+ down: No CMHC required

The CMHC premium is added to the mortgage and amortized over the loan term, not paid upfront (though provincial tax is due at closing).

UK Stamp Duty Calculation

Stamp Duty Land Tax (SDLT) is calculated using marginal rates on each portion of the purchase price:

• £0 – £250,000: 0%
• £250,001 – £925,000: 5%
• £925,001 – £1,500,000: 10%
• Above £1,500,000: 12%

First-time buyer relief applies: 0% up to £425,000, 5% on £425,001–£625,000. No relief above £625,000.

Rate Data Sources

Our default interest rates are sourced from:

• US: Freddie Mac Primary Mortgage Market Survey, updated weekly
• Canada: Bank of Canada posted rates and major bank averages
• UK: Bank of England Mortgage Lenders and Brokers Survey
• Car loans: Experian State of the Automotive Finance Market report

To update the default rates used in calculations, edit the files in /lib/rates/.