When you’re going to buy a home for the first time or refinancing your existing mortgage, the first thing that you need is a mortgage calculator. This user-friendly financial tool can fulfill all the calculation needs of a potential homebuyer. If you can use mortgage calculators correctly, you can easily choose the loan that you can afford.

There are different types of mortgage calculators. This article would specifically discuss about seven helpful mortgage calculators that the homebuyers should always use to make a good decision.

7 Mortgage calculators that the homebuyers should always use

1) Amortization calculator

This calculator would help you find out how much of your monthly loan payment is directed towards your principal and how much towards interest throughout the whole duration of the loan. You can also work out the amount you can save by paying some extra on principal. You would have a better understanding how your loan is being paid off.

2) Refinance calculator

This calculator would let you know in pretty basic terms whether you should go for refinancing. You shouldn’t only take the interest rate into consideration. Closing costs are also there which might come to 2-3% of the loan amount.

3) Affordability calculator

Based on your income and debt level, this calculator would help you find out how much mortgage you are able to afford.

4) Closing costs calculator

This calculator would help you figure out various closing costs associated with borrowing a home loan by entering inputs like escrow fees, points and title fees.

5) Early payoff calculator

This calculator would demonstrate how paying extra on your monthly loan payments can help you pay off the loan sooner and save money on interest costs.

6) Additional payment calculator

This calculator is similar to the early payoff calculator. You can work out how much you need to pay as extra each month if you decide to pay off the loan within a stipulated period.

7) Mortgage payment calculator

By entering the loan term, loan amount and interest rate, you can easily find out how much you need to spend on your loan each month.

All the abovementioned tools are important and help people make a good home buying or refinancing decision.  

Deciding to obtain a mortgage on your home is probably one of the most important decisions you will make in your life. The next important decision is to decide what type of mortgage will be suitable for you - the Fixed Mortgage Rate or the Variable Rate Mortgage. This is never an easy decision as there are no clear cut answers to the question. Home mortgages usually last for long terms such as 5 years or 10 years. Explaining Fixed Rate Mortgages

If you opt for a fixed rate mortgage Canada (FRM) your rate of interest gets locked for the entire duration of the loan. You negotiate with your mortgage lender and fix the rate of interest in advance. Opting for such a mortgage provides you with the knowledge of what your monthly outgo will be throughout the next 1 year, 5 years, or 10 years, depending on the duration of your mortgage.

If the mortgage interest rates are low at the time you are considering your loan, then going for a fixed mortgage rate Canada is the best option you have. Your payments remain fixed, even if the rates of interest hit the roof. You choose the term of the duration that suits you - either 1 year, or 5 years, or 10 years. You can opt to pay an additional payment each year - some mortgage lenders allow you to pay a maximum of 20% of your initial mortgage once a year. You also have the option of increasing your payments each year - by up to 15%-20% once a year. This will lead to paying off your loan much faster.

Fixed Mortgage Rate Canada is most popular, especially with the laymen; the first time home buyers; and those who are not comfortable with, or do not understand, fluctuations with mortgage interest rates. Moreover, as many as 75% of all home mortgages are available on fixed rates. As the interest rate will never change during the lifetime of the mortgage and nor will the monthly payments, it will allow you to budget your finances for your household and other expenses much easily.

Pricing Of FRMs

Being predictable, the fixed rate mortgages are popular despite the fact that the rate of interest charged for it is always higher than other types of mortgages, such as adjustable rate mortgages. This is because of the inherent risks in the rates of interest. The longer the term of mortgage, the higher will be the rate of interest. Just because the fixed rate mortgage has a higher rate of interest, it does not make a bad option at all.

If the rate of interest of mortgages rises, an adjustable rate mortgage will cost you higher, whereas the higher rate will have no effect on the interest rate of your Fixed Mortgage Rate Canada. Your interest rate and the monthly payment amount will remain unchanged. This is a risk your mortgage lender has agreed to take, and that is why you were charged a higher rate initially.

One advantage, if the rates fluctuate to very lower levels, is that you can go for refinancing of your mortgage. This will enable you to reduce your monthly payments. However, you need to keep in mind that it entails more closing costs.

Mortgage Terms

Though you have the option of choosing a 1 year, 5 year, or a 10 year mortgage for your home, you need to assess which may be the best for you.

Consider this: if you are considering mortgage when you are in your thirties, a 1 year mortgage term may not be suitable because of the higher monthly outgo. If you are considering a 10 year mortgage, you may still have loan on your hands as you approach your retirement age - an uncomfortable thought. In such a case, a 5 year mortgage may be appropriate for you.

A lot, of course depends on your individual circumstances.

What if your wife is pregnant and not in a position to contribute to the monthly payments? Possibly, a 5 year mortgage may be more appropriate, with lower monthly payments and cost of bringing up the baby?

You have a potential of saving on your Fixed Mortgage Rate Canada, and your decision to go for it will depend largely on the loan term, the current rate of interest, and the chances of the rate of interest on mortgages increasing or decreasing during the lifetime of your mortgage.

GIC Canada Rate stands for guaranteed investment certificate, which is a popular type of investment in Canada. The best thing about this investment is that investors get a guaranteed rate of return over a certain period of time. The rate is fixed in the beginning - at the time you are making the investment. For example, you might be promised a return of two percent if you invest for three years. GIC rates do not change with the changing market conditions. No matter how the market behaves at the time of the return, you will get what you are promised. Because of this special feature of the GIC Canada rate, this type of investment has gained rapid popularity in the banking industry in Canada.

A Better Option Than Investing In Stocks Or Bonds

It is true that investing in stocks or bonds can lead to a much larger returns, but the investors have to take risks there. The return is not guaranteed as things change very quickly depending upon the varying conditions in the market. If the market is up, you can make big money, but if the market is down, you may have to suffer big losses as well. There are no such risks associated with guaranteed investment certificates. Whatever the rate is, it is not going to change throughout the life term of your investment. If you have invested for three years, the GIC Canada rates are going to be the same for three years. This way, stocks and bonds are high-risk investments but GIC is a no-risk investment.

Factors That Determine The GIC Rate

There are several factors that are taken into account to determine the GIC Canada Rate. Some important factors include the length of time you are making the investment for and the type of the certificate you are investing in. The longer the investment period is, the higher the rates are. For example, if you invest for ten years instead of three, you are very much likely to be offered a significantly much higher rate. You can generally invest in GIC for a minimum period of six months while the maximum ceiling is ten years. It is up to the investor to decide how long a period they want to invest for. Another important factor that influences the GIC rates is the interest rate specified by the Bank of Canada (the central bank of the country). This interest rate has heavy influence on GIC return, and there is no way to change the rate once specified by the BOC.

How Does It Work?

When you invest in a guaranteed investment certificate from a financial institution, you actually lend a certain amount of money to them for a specific period of time. Once the GIC matures, it is up to you to decide whether you want to renew the investment for another period of time or just want to cash it in. You have to sign a contract with the financial institution when you buy this type of investment certificate. The contract explains all the terms and conditions that will be applicable for your investment, such as the period of time, the amount of money you are investing, the type of certificate, and the GIC Canada rates you have been promised. The institution you buy the GIC from invests your money to other bigger financial groups. No matter how much profit or loss they make from their investment, they are liable to pay the returns to you as per the GIC rates promised in the contract.

Options Other Than The Standard GIC

Besides the standard GIC, where the rates are fixed, there are some other options also that the investors may like to go for. For example, you can invest in stock-indexed or market growth guaranteed investment certificate, where the rates may change depending upon the growth of a specific stock in the market. As compared to the standard GIC, this type of investment carries risks. Though the risk is not very high, but it is there. You can expect huge returns if the stock makes big gains. But, in case the stock does not make any profit and goes in loss, you will not get any return. Another negative aspect about this low-risk GIC is that you cannot earn more than point twenty five percent (.25%) return in a period of 3 years - regardless of how big gains the stock is making.

Depending upon the GIC Canada rates promised to you on your investments, the returns might be paid to you on a monthly, quarterly, half-yearly, or yearly basis.

If you have been interested in buying a home for some time but have not managed yet to accumulate enough money for a down payment in your current savings account, you may want to consider the possibility of using an RRSP for a down payment. While this certainly has its share of pros and cons, for many people, this is a logical solution. Some will use their RRSP account for the funds to take a gap year off to travel, and others will use it to purchase an automobile, so why not consider using this money, which is entirely yours, as the means for a down payment for a home? The government in fact encourages potential homeowners to use an RRSP for a down payment, with the Home Buyer’s Plan. This provides a stimulus that allows Canadians at all walks of life to tap into their RRSP funds to draw out the adequate amount of money and lock in low interest rates, in order to ramp up real estate sales throughout the country. There is no penalty for withdrawal of these funds, nor is there any extra tax that can be charged for this withdrawal. This means that the use of the RRSP funds is one smooth transaction, without any tax penalties. There is a limit on the amount of money that can be withdrawn, which currently stands at 20,000 dollars. For many homebuyers in Canada, this will be a significant amount to put down as part of their down payment on a new home. However, there are a few stipulations. You must be considered a first-time home buyer, meaning that this money is to be used only for the first home. This is because it’s considered that if you already own a home, you can use the money from the sale of that home as a down payment for the second. This act is meant to be used by people who otherwise wouldn’t be able to dig up the funds for a down payment. This limit can be doubled if the homebuyers are a couple. Each individual is allowed to take out their separate 20,000 dollars, leading to a grand total of 40,000 dollars. For newlyweds, this is a great bonus from the government. Many find that using an RRSP for a down payment is the best idea possible when having just already gone through the large expense of throwing a wedding. Repayment options vary for those who are using an RRSP for a down payment. Generally speaking, you must start the repayment process two years after the withdrawal occurs, and begin contributing again to your retirement fund. The amount of yearly payment will vary depending on your income and circumstances, but generally speaking this two year time frame stands for all borrowers. There are exceptions for those with disabilities, who may have access to additional withdrawal options. It’s possible to participate in the Home Buyer’s Plan more than once, but only if the original withdrawal amount has been repaid. Finding low interest rates for repayment is the key to being able to take out money more than once, in an affordable and convenient manner. There are government-issued guide books available that help explain this overall process, and make the repayment plan run as smoothly as possible. This plan is meant to help potential homebuyers, not put them into debt, so the plans are quite lenient and geared towards benefiting as wide of a cross-section of the Canadian public as possible. Using an RRSP for a down payment makes the home buying process possible for many people who never before would have been able to turn up the funds to pay this large of a chunk of money. However, it is helpful to consult with a professional mortgage analyst or other financial advisor who will be able to give the latest advice according to the rules and regulations that go along with the Home Buyer’s Plan. With a little bit of knowledge and planning, a new home is within everyone’s reach, which is extremely exciting. Be sure to learn your rights however, and stick to a plan that you will be able to pay back at some point, lest you go into further debt.

This site will show you all Bank rates and compatitor rates, to help making a decision for a Home Purchase or Refinance much easier. If you have any questions, concerns, or feedback, please let us know!