Why US Mortgage Calculators Are Wrong in Canada
The Mortgage Beast
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A US mortgage calculator overstates a Canadian closed fixed-rate payment. The Interest Act requires semi-annual compounding, not monthly. You pay the contract rate; the effective monthly rate is (1 + annual/2)^(1/6) − 1, not annual/12.
On a $500,000 mortgage at 4.29% with a 25-year amortization, the same engine as our calculator produces:
| Convention | Effective monthly rate | Monthly P&I |
|---|---|---|
| Canadian semi-annual | (1 + 4.29%/2)^(1/6) − 1 | $2,709 |
| US-style monthly | 4.29% / 12 | $2,720 |
That is about $11 a month and roughly $3,200 over 25 years — not a rounding error, a different statute. The gap widens as the rate and the balance rise.
Do not use a US app to size a Canadian offer. Run the Canadian mortgage payment calculator and read the methodology.