How Canadian mortgage payments are calculated
Canadian fixed-rate mortgages use semi-annual compounding, not in advance. The nominal annual rate is split into two half-year periods, and the effective monthly rate is derived from that — slightly lower than simply dividing the annual rate by 12. On a $400,000 mortgage the difference versus US-style monthly compounding is real money over a full amortization — worth knowing when a client shows up with numbers from a generic online calculator.
Monthly vs. bi-weekly vs. accelerated bi-weekly
Regular bi-weekly payments simply split the same annual total into 26 payments — the payoff date barely moves. Accelerated bi-weekly takes half the monthly payment every two weeks, which works out to one extra monthly payment per year going straight to principal. On a typical 25-year amortization that shaves roughly 2–3 years off the mortgage, depending on the rate — an easy win to show clients who want to be mortgage-free sooner.
The payment isn't the qualification
Lenders don't qualify borrowers at the contract rate. Under the OSFI stress test, the qualifying rate is the higher of the contract rate plus 2% and the minimum qualifying rate floor — so the payment used in GDS/TDS ratios is larger than the payment your client will actually make. Our guide to GDS and TDS ratios with the stress test walks through the full calculation. Always confirm the current minimum qualifying rate with OSFI guidance, as it can change.
Comparing a refinance or early switch for a client?
The prepayment penalty often decides whether the refinance math works. Use our prepayment penalty calculator to estimate 3-month interest vs. IRD before presenting the option.