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HomeLife/Cimerman Real Estate Ltd., Brokerage Kam Ghatan, Broker Industrial · Commercial · Investment

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Mortgage Calculator

Payments, the balance at maturity, prepayments and the full schedule — Canadian compounding.

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Guide

Using Mortgage Calculator well

Works out the payment on a commercial mortgage and what is left at the end of the term — the number that decides your refinancing. It handles Canadian semi-annual compounding, payment frequency, interest-only loans and annual prepayments, and shows the full schedule year by year.

How to use it

  1. Price and loan amount: the loan as a share of the price. For income property, size it in DSCR & Financing first — the coverage test usually sets it, not the LTV.
  2. Rate and compounding: Canadian fixed-rate mortgages compound semi-annually by law; variable and many commercial facilities compound monthly. The difference is small per year and large over 25.
  3. Amortization vs term: amortization is how long the payments would take to clear the loan; the term is when the loan matures and must be renewed or refinanced — typically 5 years against a 25-year amortization.
  4. Frequency and prepayment: accelerated bi-weekly adds the equivalent of one monthly payment a year. Prepayment privileges vary; many commercial loans have yield-maintenance penalties.

Reading the result

  • Balance at maturity is the refinancing risk: on a 25-year amortization, about 90% of the loan is still owed after five years.
  • At renewal: the table re-prices what is left over the remaining amortization at today's rate and three others. If the NOI cannot carry the higher payment at the lender's coverage ratio, expect to pay down the loan at renewal.
  • Loan constant: annual payments ÷ loan. When it is above the cap rate, the debt costs more than the building yields (negative leverage).

Case studies

01

A $9.85M loan on a $17.9M building

The Mississauga building from NOI & Cap Rate: 55% loan ($9,845,000) — the most the lender's 1.30× coverage test allows — at 5.75% fixed, 25-year amortization, 5-year term, monthly payments.

  1. Monthly payment: $61,533 — $738,401 a year, a 7.5% loan constant against a 5.39% cap rate.
  2. Interest over the five-year term: about $2.66M. Principal repaid: about $1.03M.
  3. Balance at maturity: about $8.81M — 90% of the original loan, to renew or refinance in 2031.

The lessonThe first five years of a 25-year mortgage are mostly interest. Plan the refinancing on day one: the maturity balance, not the payment, is the number that can force a sale.

02

Renewal at a higher rate — and how prepaying changes it

The same loan, five years on. The $8.81M balance is re-priced over the remaining 20 years.

  1. At 5.75% the annual payment is unchanged at about $738,400. At 6.75% it rises to about $798,300; at 7.75%, to about $860,200 — $122,000 a year more.
  2. With the building's $965,484 NOI, 7.75% takes coverage from 1.31× to 1.12×: below most lenders' 1.20×–1.30× minimum, so the lender would ask for a paydown.
  3. Paying 5% of the original loan down each year (about $492,000) leaves about $6.05M at maturity instead of $8.81M, and clears the loan in about 11 years — saving roughly $5.1M of interest over the life of the loan.

The lessonBefore you lock a 5-year term, test the renewal at +1% and +2%. If the coverage fails, budget a paydown — or negotiate prepayment privileges now, while you have leverage.

Common mistakes

  • Confusing the term with the amortization
  • Using monthly compounding for a Canadian fixed rate
  • Ignoring the balance at maturity
  • Assuming prepayment is free on a commercial loan

Case studies are illustrative. Properties and figures are composites built to show the method; they are not offers or appraisals. Talk to Kam before relying on any number for a transaction.

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