What's the difference between a Canadian and American mortgage?
You may have noticed as you were searching for a mortgage calculator that different websites give different results. How can that be aren't all mortgages calculated the same? Not at all.. What separates a Canadian mortgage is the fact that our interest is only compounded semi-annually whereas a US mortgage is compounded on a monthly basis.
So then what difference does this make to me as a consumer?
The difference is that we end up paying less interest than our American counterparts.
Take a look at this example:
Canadian Mortgage:
A Canadian couple borrows $100,000 at an interest rate of 6% amortized over 25 years.
Their monthly mortgage payment will be - $639.81
American Mortgage:
An American couple borrows $100,000 at an interest rate of 6% amortized over 25 years.
Their monthly mortgage payment will be - $644.30
The total difference over the life of the mortgage will be $1347.00