# One of those Q's I should have asked earlier



## v_tofu (Apr 16, 2009)

Hi all,

This is something I probably should have thought of or asked earlier, but things happen right? 

I'm just wondering exactly how does one's mortgage interest gets calculated?

For example, how much goes to the actual principal and how much goes to interest? Are they all calculated the same way? Or do individual banks have their own formulation?

cheers,


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## Berubeland (Sep 6, 2009)

> Interest and Mortgage Formula Calculation
> 
> With mortgages, we want to find the monthly payment required to totally pay down a borrowed principal over the course a number of payments.The standard mortgage formula is:
> 
> ...


Source: How To Calculate Mortgage Payments


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## Berubeland (Sep 6, 2009)

This is the website i got that info from 

http://www.fonerbooks.com/interest.htm


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## Ben (Apr 3, 2009)

http://www.hsh.com/calc-amort.html

Good link from another thread that shows how much interest and principle is paid with every payment.


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## Rickson9 (Apr 9, 2009)

RBC's calculator graphically shows how slowly the mortgage balance declines with time.

https://www.rbcroyalbank.com/cgi-bin/mortgage/mpc/start.cgi


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## DAvid (Apr 3, 2009)

Berubeland said:


> Interest and Mortgage Formula Calculation
> 
> The only bright side to paying the bank all of that interest is that in most cases, it's deductible on your Federal income tax in the in the years that it's paid. The savings to you depends on what tax bracket you're in. If you're only in the 10% tax bracket to start with, you're only getting a 10% discount on your taxes for carrying a mortgage. If you're in the 25% tax bracket, you're getting a 25% discount.


Huh? Could you provide the reference from CRA allowing this deduction? 

DAvid


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## Berubeland (Sep 6, 2009)

IRS is more like it 

It was a good explanation of how mortgage interest is calculated 

Generally CRA does not allow mortgage interest to be claimed on a principal residence.


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## Shayne (Apr 3, 2009)

www.vertex42.com Awesome mortgage calculators!!


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## takingprofits (Apr 13, 2009)

v_tofu said:


> Hi all,
> 
> I'm just wondering exactly how does one's mortgage interest gets calculated?
> 
> ...


US and Canadian Mortgages are different so the info found on American websites will not satisfy those who are details oriented. Read Candian vs. US Mortgage Compounding for a good explanation of the differences.


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