Amortization and renewal
At today’s rate your payment never changes.
Which is not the scenario to plan for. Move the renewal rate above your current one and watch what happens at year 6 — that is the risk nobody models.
Typical figures
Mortgage $422,329 · first term at 3.94% fixed · renewals at 3.94%
The first term is priced today. This is the payment you would actually make, on the mortgage after the insurance premium is added to it.
Your rate is fixed for the term, not for the amortization: of the 30 years above, 5 are priced today, and the rest is repriced at every renewal.
No change
Your first term is priced today. Every renewal after it is priced by whatever the market is doing then, and the payment is recalculated on the balance left over the amortization left.
Renewal risk is the largest unmodelled risk in a Canadian mortgage
A stress test at origination checks you could carry the payment at two points above your rate. It is a one-time test, and it does not follow you. At every renewal you re-enter the market with no protection at all, and nobody re-runs the test for you. This is the mechanism that breaks household budgets: not the purchase, the renewal five or ten years later. Plan for the payment you would face at a materially higher rate, and treat any rate below that as good luck rather than a forecast.
No renewal rate set — the schedule assumes today’s rate for the whole loan.
Total interest over the loan $295,489 · Insurance premium added to the loan $13,492
Interest plus the insurance premium is the true price of borrowing. It is not part of the house; it is what the house costs to finance.
Paid off in year 30
Interest dominates the early years and principal the later ones. The renewal years are marked, because that is where the payment changes.
| Yr | Rate | Monthly payment | Interest | Principal | Balance at year end |
|---|---|---|---|---|---|
| 1 | 3.94% | $1,994 | $16,370 | $7,557 | $414,772 |
| 2 | 3.94% | $1,994 | $16,070 | $7,858 | $406,915 |
| 3 | 3.94% | $1,994 | $15,757 | $8,170 | $398,745 |
| 4 | 3.94% | $1,994 | $15,432 | $8,495 | $390,249 |
| 5 | 3.94% | $1,994 | $15,094 | $8,833 | $381,416 |
| 6Renewal | 3.94% | $1,994 | $14,743 | $9,185 | $372,231 |
| 7 | 3.94% | $1,994 | $14,377 | $9,550 | $362,681 |
| 8 | 3.94% | $1,994 | $13,997 | $9,930 | $352,751 |
| 9 | 3.94% | $1,994 | $13,602 | $10,325 | $342,426 |
| 10 | 3.94% | $1,994 | $13,191 | $10,736 | $331,690 |
| 11Renewal | 3.94% | $1,994 | $12,764 | $11,163 | $320,527 |
| 12 | 3.94% | $1,994 | $12,320 | $11,607 | $308,919 |
| 13Principal overtakes interest | 3.94% | $1,994 | $11,858 | $12,069 | $296,850 |
| 14 | 3.94% | $1,994 | $11,378 | $12,549 | $284,300 |
| 15 | 3.94% | $1,994 | $10,879 | $13,049 | $271,252 |
| 16Renewal | 3.94% | $1,994 | $10,359 | $13,568 | $257,684 |
| 17 | 3.94% | $1,994 | $9,819 | $14,108 | $243,576 |
| 18 | 3.94% | $1,994 | $9,258 | $14,669 | $228,907 |
| 19 | 3.94% | $1,994 | $8,674 | $15,253 | $213,654 |
| 20 | 3.94% | $1,994 | $8,068 | $15,860 | $197,794 |
| 21Renewal | 3.94% | $1,994 | $7,437 | $16,491 | $181,304 |
| 22 | 3.94% | $1,994 | $6,780 | $17,147 | $164,157 |
| 23 | 3.94% | $1,994 | $6,098 | $17,829 | $146,328 |
| 24 | 3.94% | $1,994 | $5,389 | $18,538 | $127,789 |
| 25 | 3.94% | $1,994 | $4,651 | $19,276 | $108,513 |
| 26Renewal | 3.94% | $1,994 | $3,884 | $20,043 | $88,470 |
| 27 | 3.94% | $1,994 | $3,087 | $20,840 | $67,630 |
| 28 | 3.94% | $1,994 | $2,258 | $21,670 | $45,960 |
| 29 | 3.94% | $1,994 | $1,395 | $22,532 | $23,428 |
| 30 | 3.94% | $1,994 | $499 | $23,428 | $0 |
Where the payment comes from, step by step
A price and a percentage become a monthly payment, and where mortgage insurance applies it is added to the loan before the payment is worked out. The year-by-year schedule is in the section above.
- Purchase price
- $454,264
- − Down payment
- $45,426
- 10.00%
- = Borrowed before insurance
- $408,838
- + Insurance premium added to the loan
- $13,492
- = Mortgage
- $422,329
- × Rate
- 3.94%
- × Amortization
- 30 years
- = Monthly payment
- $1,994
Adjust your numbers
Every figure that carries a sourcing record names where it came from: a dated published source, an estimate we disclose, or nothing at all where nothing is published.
Rules last verified 2026-08-24