10 must-use online housing and mortgage calculators
No. 1: Buying versus renting calculator
If you’re currently renting and want to know whether or not you should dive into the housing market, you’ll want to explore a renting versus buying calculator. This New York Times calculator is one of the best. Keep in mind it was built for American users, and the housing market in Canada is different in significant ways. However, if you’re looking for general guidance on when it’s best to buy or continue renting, you’ll get it here. Based on the most important costs of homeownership, the tool gives you an equivalent monthly rent to benchmark against and decide if it makes more financial sense to rent.
North of the border, Benjamin Felix, a portfolio manager and head of research and client education with PWL Capital in Ottawa, has built a Google Sheet calculator to help you compare buying and renting options. Shared with the Globe and Mail in November, the tool uses the 5% rule as a guide. The rule stipulates that if you can rent for 5% or less than what it would cost to buy a home, you might be better off renting.
No. 2: Mortgage affordability calculator
If you want to know how much home you can afford on a mortgage before you get excited bookmarking listings, check out the Financial Consumer Agency of Canada’s (FCAC) mortgage qualifier tool. It will quickly tell you whether or not you qualify for a specific mortgage amount based on your income and expenses. You can also recreate some of these calculations yourself using the Canada Mortgage and Housing Corporation’s (CMHC) debt service calculator. (Note, however, that FCAC and CMHC use different debt-to-income ratios in their models.)
If you have a specific amount set aside for a down payment, another option is to use Ratehub.ca’s mortgage affordability calculator. The tool determines the maximum you can afford on a home based on your income, expenses, debt payments and living costs. (Note: Both Ratehub.ca and MoneySense.ca are owned and operated by Ratehub Inc.)
For a different approach, try Mortgage Maestro’s affordability calculator, which asks you to input your maximum monthly mortgage payment and then works backwards to calculate the size of the mortgage that will fit that budget. It will also show you interest paid on the lifetime of the loan and how long it will take you to pay it off.
No. 3: Mortgage payment calculator
To understand what taking on a mortgage means for your finances, consider using a mortgage payment calculator. These tools use the details of your mortgage contract, including the size of your mortgage, amortization and interest rate, to tell you how much you’ll pay every month.
The FCAC offers a mortgage payment calculator on its website that is free and easy to use. It allows you to model your payments based on different payment options, such as bi-weekly or accelerated bi-weekly. It also helps the user see the impact mortgage prepayments have on the total interest paid over the life of the loan.
Some mortgage payment calculators, like this one from Ratehub.ca, even calculate the other fees that come with buying a home, such as your land transfer taxes, mortgage loan insurance fees and property taxes.