What is semi-annual compounding and why does Canada use it?

The Canadian Interest Act (RSC 1985, c. I-15, §6) requires the interest rate on a fixed-rate mortgage be quoted at a maximum compounding frequency of semi-annually. The periodic monthly or bi-weekly rate is derived from that semi-annual figure. The result: monthly payments compute against a slightly lower periodic rate than a US-style monthly-compounded mortgage at the same nominal rate.

What's the difference between monthly, bi-weekly, and accelerated bi-weekly?

Monthly = 12 payments per year. Bi-weekly = 26 payments per year, each equal to (monthly × 12) ÷ 26 — same total annual payment, just split differently. Accelerated bi-weekly = 26 payments per year, each equal to (monthly ÷ 2) — that's 13 monthly-equivalent payments per year instead of 12, which shortens the amortization by 3–4 years on a typical 25-year mortgage.

Can I get a 30-year amortization?

Effective Dec 15, 2024, 30-year amortization on an insured mortgage (less than 20% down) is restricted to first-time buyers OR any buyer of newly-constructed housing. Conventional buyers (20%+ down) can amortize over 30 years regardless of status, since the deal isn't insured. Some credit unions also offer 35-year amortization on conventional mortgages — use the Custom amortization option to model that scenario.

What happens to my payment at renewal?

Canadian mortgages typically have terms of 1–5 years; at the end of the term, the rate resets to whatever the market is at that point. The year-5 snapshot above shows your principal remaining at renewal — that's the amount you'll re-amortize at the new rate. Recent context: BC homeowners who renewed in 2020 were near 1.85% and renewed again in 2025 near 5.25%, a 340 basis-point swing in five years.

Why does my lender quote a different rate from the one I qualify at?

Two different rates. The contract rate is what you pay month to month. The qualifying rate (the OSFI B-20 stress test) is what the lender uses to size your pre-approval — the greater of (contract rate + 2 percentage points) or 5.25%, whichever is higher. To see what mortgage size that qualifies for under your income, use the affordability calculator.

Is this a mortgage pre-approval?

No. This calculator estimates the periodic payment on a known principal at a known rate. A pre-approval verifies your income, credit, down-payment source, and ability to qualify under your lender's specific rules (which may differ slightly from the standard OSFI / CMHC convention). Talk to a licensed mortgage broker for an actual approval.

Mortgage payment calculator

Canadian Mortgage Payment Calculator

Name: Mortgage payment calculator (BC)
Author: Bronson Job PREC

Uses semi-annual compounding (the Interest Act, RSC 1985, c. I-15). Applies to Canadian fixed and variable mortgages.

Last reviewed June 10, 2026 by Bronson Job PREC, REALTOR®Sources: OSFI, CMHC, Government of CanadaCC BY 4.0How we verify

Your monthly payment on a $800,000 mortgage at 5.5% over 25 years is $4,883.13.

Calculate

Mortgage principal (CAD)Contract rate (% per year)

Amortization period

25 years30 yearsCustom

Payment frequency

MonthlyBi-weeklyAccelerated bi-weekly

Periodic payment (Monthly)

$4,883.13

Annual payment: $58,598
Total interest over 25-year amortization: $664,940
Total cost of mortgage (principal + interest): $1,464,940
Year-5 snapshot — principal remaining: $713,500
Year-5 snapshot — interest paid through year 5: $206,488

Estimate only. Confirm with a licensed professional before relying on this number.

Your lender will produce the binding amortization schedule on commitment day. Numbers reflect an idealized constant-rate amortization; renewal at year 5 will reset the periodic rate to the market rate at that time. This is not a mortgage quote or pre-approval — talk to a licensed mortgage broker or your lender for an actual approval.

How we verify →

Show the math4 steps

Step	Amount
Periodic rate (semi-annual compounding): (1 + 5.5/200)^(2/12) − 1 = 0.453168% (osfi.b20.stress_test)	$4,883.13
Monthly payment over 25-year amortization (300 payments)	$4,883.13
Annual payment (periodic × payments-per-year)	$58,597.58
Total interest paid over 25-year amortization	$664,939.56
Total	$4,883.13

Computed from the BC Real Estate Codex · CC BY 4.0

Try a typical scenario

Where this fits in your buying journey

How semi-annual compounding works

The Canadian Interest Act (RSC 1985, c. I-15, §6) requires that the interest rate quoted on a fixed-rate mortgage be expressed at a maximum compounding frequency of semi-annually. Lenders compute the periodic (monthly / bi-weekly) rate as the equivalent rate that, compounded semi-annually, yields the quoted nominal rate.

At a 5.5% nominal rate, the periodic monthly rate is approximately 0.4531% (semi-annual compounding). On an $800,000 mortgage over 25 years that periodic rate produces a monthly principal-and-interest payment of about $4,890.

Variable-rate mortgages are typically compounded monthly because the rate floats. The Interest Act’s principal-protection rules still apply. This calculator assumes fixed-rate semi-annual compounding by default.

The rate you pay versus the rate you qualify at

The contract rate above is the rate you pay. The federal mortgage stress test (OSFI Guideline B-20 mortgage stress test) qualifies you at a higher rate — the greater of your contract rate plus 2 percentage points or 5.25%. To see what mortgage size that translates to against your income, use the what you can afford calculator.

Source: /codex#osfi.b20.stress_test

Common questions about Canadian mortgage payments

What is semi-annual compounding and why does Canada use it?
The Canadian Interest Act (RSC 1985, c. I-15, §6) requires the interest rate on a fixed-rate mortgage be quoted at a maximum compounding frequency of semi-annually. The periodic monthly or bi-weekly rate is derived from that semi-annual figure. The result: monthly payments compute against a slightly lower periodic rate than a US-style monthly-compounded mortgage at the same nominal rate.
What's the difference between monthly, bi-weekly, and accelerated bi-weekly?
Monthly = 12 payments per year. Bi-weekly = 26 payments per year, each equal to (monthly × 12) ÷ 26 — same total annual payment, just split differently. Accelerated bi-weekly = 26 payments per year, each equal to (monthly ÷ 2) — that's 13 monthly-equivalent payments per year instead of 12, which shortens the amortization by 3–4 years on a typical 25-year mortgage.
Can I get a 30-year amortization?
Effective Dec 15, 2024, 30-year amortization on an insured mortgage (less than 20% down) is restricted to first-time buyers OR any buyer of newly-constructed housing. Conventional buyers (20%+ down) can amortize over 30 years regardless of status, since the deal isn't insured. Some credit unions also offer 35-year amortization on conventional mortgages — use the Custom amortization option to model that scenario.
What happens to my payment at renewal?
Canadian mortgages typically have terms of 1–5 years; at the end of the term, the rate resets to whatever the market is at that point. The year-5 snapshot above shows your principal remaining at renewal — that's the amount you'll re-amortize at the new rate. Recent context: BC homeowners who renewed in 2020 were near 1.85% and renewed again in 2025 near 5.25%, a 340 basis-point swing in five years.
Why does my lender quote a different rate from the one I qualify at?
Two different rates. The contract rate is what you pay month to month. The qualifying rate (the OSFI B-20 stress test) is what the lender uses to size your pre-approval — the greater of (contract rate + 2 percentage points) or 5.25%, whichever is higher. To see what mortgage size that qualifies for under your income, use the affordability calculator.
Is this a mortgage pre-approval?
No. This calculator estimates the periodic payment on a known principal at a known rate. A pre-approval verifies your income, credit, down-payment source, and ability to qualify under your lender's specific rules (which may differ slightly from the standard OSFI / CMHC convention). Talk to a licensed mortgage broker for an actual approval.

Sources: OSFI

Verified sources (1)· re-verified 2026-05-08Click to expand

Every claim on this page is sourced to a primary government, regulator, or industry-association URL. We re-verify quarterly; the verification dates below show when each source was last confirmed against the live government page.

OSFIretrieved 2026-05-08
Guideline B-20: Residential Mortgage Underwriting Practices and Procedures
https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/final-revised-guideline-b-20-residential-mortgage-underwriting-practices-procedures

Fact ID: osfi.b20.stress_test · v1View in Codex →

Spot an issue? Report an inaccuracy · How we verify

Sources: Government of Canada