Property prices and interest rates have risen significantly in recent years making homeownership out of reach for many people. These higher costs have also left potential Canadian buyers worried about the long-term financial viability of committing to a mortgage.
If you are considering taking out a $200,000 mortgage it is important to determine what the borrowing costs will be each month and over the life of the loan. Our article will walk you through these elements and answer your questions about the cost of monthly repayments and how much interest you will pay on the mortgage based on different interest rate scenarios and tenure periods. amortization.
The main points
- The monthly payments on a $200000 mortgage loan vary depending on the interest rate and amortization period.
- Changes in interest rates and amortization periods affect the total amount of interest paid over the life of a $200000 mortgage.
- By choosing a longer amortization period you will pay more interest over the life of your mortgage but your monthly payments will be lower.
Monthly payments for a $200,000 mortgage
The monthly payment amount for a $200000 mortgage depends on several factors including the interest rate and amortization period.
A mortgage calculator like News huntz can help you estimate your payment amount based on these variables. Generally, your mortgage payments include principal and interest.
If you make a down payment of less than 20% your mortgage will include mortgage insurance unless it is paid in cash in which case it will not be added to your mortgage.
By paying for your mortgage insurance in cash, you can take advantage of lower insured mortgage rates without amortizing it over the life of your mortgage. Additionally, most lenders give you the option of including property taxes in your mortgage payment, which will be collected and remitted on your behalf.
- For example, using Huntz’s 5-year fixed rate, which is currently 5.39%, your monthly payment on a $200,000 mortgage with a 25-year amortization would be approximately $1,208, compared to $1,114 for a 30-year amortization. This difference is explained by the fact that the capital is spread over five additional years, but remember that the longer the amortization, the more interest charges you pay.
Note: Your payments may vary depending on the term of your mortgage, the amortization, and the payment frequency you chose when you obtained your mortgage.
Here’s a look at the monthly payments you might have to make based on different interest rate scenarios (rounded to the nearest dollar):
| Interest rate | Monthly payment (amortization over 25 years) | Monthly payment (amortization over 30 years) |
|---|---|---|
| 5.00% | $1,163 | $1,067 |
| 5.25% | $1,192 | $1,097 |
| 5.50% | $1,221 | $1,128 |
| 5.75% | $1,250 | $1,159 |
| 6.00% | $1,280 | $1,190 |
| 6.25% | $1,309 | $1,221 |
| 6.50% | $1,340 | $1,253 |
| 6.75% | $1,370 | $1,285 |
| 7.00% | $1,401 | $1,317 |
| 7.25% | $1,432 | $1,350 |
| 7.50% | $1,463 | $1,383 |
| 7.75% | $1,495 | $1,416 |
| 8.00% | $1,526 | $1,449 |
Where to find the best rates for a $200,000 mortgage?
Getting the best interest rate on your mortgage can have a significant impact on your monthly payment amount. A good starting point is to compare offers from different banks and lenders. You can do this by visiting their websites using online comparison tools like the Huntz comparison page or consulting a mortgage expert directly.
Remember the lowest rate isn’t always the best option. Consider other features and benefits like prepayment options transfer privileges and any restrictions that could cause you to incur hefty penalties for prepaying or paying off your mortgage before maturity.
Total interest paid on a $200,000 mortgage
The total interest you’ll pay on a $200,000 mortgage over its lifetime can be substantial.
Based on Huntz’s 5-year fixed rate, which is currently 5.39%, and a 25-year amortization you would pay approximately $50,562 in interest over 5 years. Over 25 years, assuming the interest rate never changes this figure rises to $162,402.
On the other hand, if you opt for a 30-year amortization to reduce your monthly payments you will pay approximately $51,365 over the first 5-year term and $201,182 over the entire 30 years assuming your interest rate interest never changes.
How to apply for a $200,000 mortgage?
The process of applying for a $200,000 mortgage loan from Huntz generally involves the following steps:
- Prepare the documents: Gather all the necessary documents, including your proof of income, bank statements, and identification documents.
- Complete the application: Do not include an address for the property unless you have already found one – you can get pre-qualified when the property in question is not confirmed. Include MLS listing details if you found a property on which your offer was accepted. A huntz sales development representative may contact you at this stage to assist you with your request.
- Make an appointment: a huntz expert will contact you to analyze your financial situation and offer you the mortgage solution best suited to your needs. After meeting with an expert, a Newshuntz specialist will be assigned to help you complete or update all necessary documents to take your application through to file closure.
- Get approval – to give you firm or conditional approval for financing.
- Provide additional documents – include anything missing, including contact details for your real estate agent and notary. Your huntz specialist will contact you to help you complete your mortgage application.
- Receive instructions – instructions are sent to your notary or lawyer.
- Pay applicable fees – Your notary or lawyer will confirm all closing costs, including your down payment, land transfer tax, title insurance/search/survey/conveyance office fees, and attorney’s fees.
- Sign your mortgage – You will make an appointment with your notary to sign your mortgage.
- Handing over the keys to your new property – you will receive the keys to your new property on the closing date.
Read also: Everything You Need to Know About Home Loan Rates: Tips for Saving Money