Loan Payment Calculator

Understanding your loan payments

This calculator helps you determine your regular payment amount for any loan. The payment includes both principal (the original amount borrowed) and interest. More frequent payments can reduce the total interest paid over the life of the loan. Amortization is the process of spreading loan payments over a set period. Each payment is split between principal and interest. Early in the loan, most of the payment goes toward interest. Over time, the interest portion shrinks and the principal portion grows. The amortization schedule this calculator generates shows exactly how each payment is divided. In Canada, mortgage loans differ from personal loans in several ways. Mortgages have terms (typically 1-5 years) within a longer amortization period (up to 25 years for insured mortgages). At the end of each term, you renew at current rates. Personal loans usually have a single fixed term matching the full amortization. Fixed-rate loans lock your interest rate for the entire term, giving predictable payments. Variable-rate loans fluctuate with the lender's prime rate, which follows the Bank of Canada's overnight rate. Variable rates are often initially lower but carry the risk of rising payments. Most Canadian loans allow prepayment privileges: typically 10-20% of the original balance per year can be paid down without penalty. Making even small lump-sum payments directly reduces principal and can save thousands in interest over the life of the loan. Lenders evaluate your Debt-to-Income (DTI) ratio when approving loans. In Canada, the Gross Debt Service (GDS) ratio should not exceed 39% of gross income, and the Total Debt Service (TDS) ratio should stay below 44%.