Mortgage payments are often people’s largest expense, surpassing insurance, gas, food, and property taxes. For this reason, it’s important to understand your mortgage payment schedule, including the interest rates you’ll pay, whether to boost your down payment, make extra payments, or choose a different amortization schedule upon renewal.
To provide a comprehensive overview of monthly mortgage costs across Canada, Zoocasa analyzed mortgage payments in various cities nationwide. This analysis utilized biweekly and monthly mortgage payments amortized over 15-year and 25-year terms. Additionally, average home prices were obtained from the Canadian Real Estate Association (CREA). Mortgage calculations were based on a fixed rate of 4.84%, with a 10% down payment for homes under $1 million and a 20% down payment for homes over $1 million. Furthermore, mortgage summary data was obtained from the Government of Canada’s Financial Consumer Agency of Canada Mortgage Calculator.
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Finding Savings: Mortgage Payments vs. Average Rent
In the 22 major markets analyzed, 32% of mortgage payments within a 25-year monthly mortgage payment schedule were below $2,200, the average rent in Canada as reported by Rentals.ca. The housing markets where paying a monthly mortgage is more affordable than renting include Saint John, Thunder Bay, Regina, Saskatoon, Winnipeg, Quebec, and Edmonton. With this in mind, home buyers have plenty of options across different provinces, with seven cities offering opportunities for investing in real estate that are less than mortgage payment.
Navigating Affordable Housing: Canadian Mortgage Options
For those prioritizing affordability, 73% of the markets analyzed fell below the national average under the 15-year mortgage payment schedule for biweekly rates of $2,214 and monthly rates of $4,801. Housing markets exceeding this average for overall mortgage payments are primarily in Ontario’s most expensive areas, including Greater Toronto and its surrounding regions of Kitchener-Waterloo and Hamilton-Burlington, as well as in British Columbia, including Greater Vancouver, Victoria, and the Fraser Valley.
Understanding Mortgage Payment Schedules and Rates
As an illustration, let’s consider a home priced at $663,405, the national average. Breaking down the monthly ownership costs reveals the following: after excluding the 10 percent down payment and factoring in a 4.84% fixed rate, along with $18,500 in mortgage insurance, the total balance is $615,573.
Opting for a 15-year amortization period may result in higher monthly mortgage payments, but in the long run, it leads to paying less interest overall. With this example, when comparing a 15-year and a 25-year mortgage amortization period, one can save a whopping $200,000 in interest payments over time.
Do you have questions about affording a home? Our agents are here to assist you through the home-buying process and provide valuable insights into your local housing market. Give us a call today.
