What you should know about your mortgage payments

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1. How to estimate mortgage payments

   The TD Mortgage Payment Calculator uses some key variables to help estimate your mortgage payments:

   • Mortgage principal amount: This is the purchase price minus your down payment.

   • Term and Interest rate: Choose a term and interest rate that best suits your needs and your timeline.

   • Amortization period: Decide on the length of time you will take to repay the mortgage in full.

   • Payment frequency: Select how often you would like to make payments on your mortgage.

   Learn more about mortgage terms that may affect your payments.

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2. Key considerations for your mortgage payments

   Buying your home is a big investment so it makes sense to want the best interest rate and lowest mortgage payments possible – after all, saving even a small amount can add up to big savings in the long run. But how does TD determine what those payments will be? Here are some key factors that can affect your mortgage payments:

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   • Location, location, location: The province or region where you buy your home may affect your mortgage interest rate and, therefore, your payments.

   • The amount you borrow: This is equal to the price of your home minus your down payment plus mortgage default insurance, if you’re putting down less than 20%. The more you borrow, the higher your payments, keeping the same amortization period.

   • Fixed vs variable interest rates: With a fixed rate mortgage, the interest rate and the payment you make will stay constant for the term of your mortgage, offering stability. With a variable interest rate mortgage, the interest rate will change when the TD Mortgage Prime Rate changes. This means that the portion of your payment that goes toward the principal may rise or fall over the term of your mortgage, which can result in your amortization period getting longer or shorter. If your interest rate increases so that the monthly payment does not cover the interest amount, you may be required to adjust your payments, make a prepayment, or pay off the balance of the mortgage.

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3. How to get approved for a mortgage

   Here are some important considerations to keep in mind as you apply for a mortgage:

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   1. Do you have loans, like a car payment or student loan? Consider paying off what you can and avoid taking on new loans before you begin the application process.

   2. Understand your finances: Evaluate your total housing payments (eg. don't forget property taxes and utilities), ideally keeping them at 35% or less of your gross income.

   3. Decide how much you can put down as a down payment. Under Canadian mortgage rules, home buyers with a down payment of less than 20% are subject to mortgage default insurance.

   4. Know your credit score and credit history. These items could impact the principal amount mortgage lenders may approve you for.

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4. What is a Mortgage Payment?

   Your mortgage principal is the mortgage amount you borrowed to buy your home minus what you’ve already paid back through monthly or bi-weekly payments. Remember, however, that the full amount of those mortgage payments doesn't go toward paying down your mortgage principal. That’s because any interest owing is paid first. The good news is, as you continue to make mortgage payments and the principal is reduced, a higher portion of your payments will go toward paying down the mortgage principal.

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5. How to pay off your mortgage faster

   Paying off your mortgage may seem like a distant dream at first. The good news is that even small amounts can help you reach that goal sooner. Here are some ways to pay your mortgage down faster and even save on interest costs.

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   • - Take advantage of lump-sum payments. If you can make lump-sum payments on your mortgage, it will reduce the principal balance, reducing the time to pay off your mortgage loan which allows you to save on interest.¹Note 1

   • - Take advantage of increased payment options or choose a shorter amortization period. This increases your monthly payments but may reduce the amount of interest you pay over the shortened life of your mortgage. Depending on the type of mortgage, TD customers can increase their payments by up to 100% of their regular payment amount at any time throughout the term of the mortgage. Learn more about our mortgage payment features.

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Legal:

¹Note 1Subject to prepayment privilege in your mortgage.