Mortgage Interest Calculator
Not what your payment is — what the borrowing actually costs. Total interest over the full amortization, what you'll pay during this term, and what a shorter amortization saves.
Your mortgage
Assumes 20% down and a 5-year term, monthly payments. For payment frequency, prepayments and CMHC premiums, use the full payment calculator.
Total interest over 25 years
$397,110
That's 41.5% of everything you'll pay — $957,110 in total on a $560,000 mortgage.
During your 5-year term
In your first term, more of your money goes to interest than to owning the house. That flips later — amortization is front-loaded with interest by design.
How much interest will I pay on a mortgage in Canada?
On a $700,000 home with 20% down at 4.79% over 25 years, total interest comes to about $397,110 — roughly 41% of everything you pay. Shortening the amortization to 20 years cuts that to about $308,003, for about $426 more per month. Canadian fixed mortgages compound semi-annually rather than monthly, which makes the true cost slightly lower than a US-style calculation would suggest.
Key Takeaways
- Interest is usually the largest single cost of owning a home — larger than land transfer tax, commission and closing costs combined.
- Amortization moves it more than anything else you control. Rate matters, but the number of years matters more.
- In the early years most of each payment is interest, not principal. That is arithmetic, not a bad deal — the balance is largest at the start.
- Canadian fixed-rate mortgages compound semi-annually, not monthly. A calculator using US conventions overstates your interest.
- Lump-sum prepayments come straight off principal, so they remove all the future interest that principal would have generated.
What amortization costs you
$700,000 home, 20% down, 4.79% fixed. Computed by the same engine as the calculator above.
| Amortization | Monthly | Total interest | vs 25 years |
|---|---|---|---|
| 20 years | $3,617 | $308,003 | −$89,107 |
| 25 years | $3,190 | $397,110 | — |
| 30 years | $2,919 | $493,696 | +$96,586 |
Frequently asked questions
- How is mortgage interest calculated in Canada?
- Interest accrues on the outstanding balance, and for fixed-rate mortgages Canadian law requires it to be compounded semi-annually rather than monthly. That is a genuine difference from the United States: the same nominal rate produces slightly less interest here, and a calculator built on US conventions will overstate your cost.
- Why is so much of my early payment interest rather than principal?
- Because interest is charged on the balance, and the balance is at its largest at the beginning. Each payment reduces the principal a little, so the next payment has slightly less interest in it. The split shifts gradually and crosses over partway through the amortization — it is arithmetic, not a penalty.
- Does a shorter amortization really save that much?
- Yes, and usually more than shopping for a slightly better rate. A shorter amortization raises the monthly payment but removes years of interest from the end of the loan, where the balance has been sitting the longest. It is the largest single lever most borrowers control.
- How much interest will I pay during my term?
- Far more than most people expect relative to the principal they pay off. On a typical first five-year term at current rates, the interest portion exceeds the principal portion — meaning more of the money goes to the lender than to owning the house. The calculator above shows the split for your own numbers.
- Does making extra payments reduce interest?
- Substantially, because a lump sum comes straight off the principal and therefore removes every future interest charge that principal would have generated. The earlier it is made, the more interest it removes. Most Canadian mortgages allow annual prepayments of 10–20% of the original amount without penalty.
Want to cut the interest rather than just measure it? The prepayment calculator shows what lump sums and extra payments save, and the amortization schedule breaks it down payment by payment.
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