With the HomeCalculator software you can calculate and compare all the standard payments available for mortgages on one screen. You can compare payments, interest costs, amortization periods, and potential savings by choosing one payment over another. You can also do 'what if' calculations where you solve for a missing figure. You can even calculate early prepayment penalties.

If you think your mortgage lender has told you everything you need to know about mortgages, take the following quiz and see if you need the HomeCalculator.

Quiz:

1. Did you know there are 10 standard payments available for mortgages?
2. Did you know that besides a 25 year amortization you can choose any number of years?
3. Did you know that mortgage terms range from 6 months to 25 years?
4. Did you know that by reducing your amortization, choosing a more frequent payment, and making prepayments, you could cut your interest costs and amortization period in half?
5. Did you know that closed mortgages do not legally have to allow any prepayments at all, and if they do, it is at the lender's discretion and a penalty for lost interest is charged?

If you answered NO to any of the questions above, you need the HomeCalculator.

The HomeCalculator will give you knowledge and power which will help you make a wise decision and save a bundle on interest costs. It will solve the: pick a payment, any payment, quandary. It will give you peace of mind by knowing you made the best choice based on your financial situation.

System requirements: Windows 3.1, Windows 95/98, processor running at 100 Mhz or higher.

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Here’s how one couple could have saved $94,500 in interest costs on their $150,000 mortgage.

1. Mr. & Mrs. Worry Later:

• were quoted based on a 25 year mortgage amortization
• were told the interest rate for a five year term was 7%
• were quoted a monthly payment of $1,050.62

2. Mr. & Mrs. Plan Ahead:

• bought the HomeCalculator before they contacted a lender
• knew they could afford to spend $1,200 per month
• shopped around and negotiated a 6% interest rate for a five year term
• used the HomeCalculator to figure out how long it would take to pay off their mortgage if they paid $1,200 per month, 16 years
• told their lender they wanted a 16 year mortgage amortization
• requested fully accelerated bi-weekly payments
• knew their payment would be $605 every two weeks

Let’s compare the results:

1. Mr. & Mrs. Worry Later:

• will take 25 years to pay off their $150,000 mortgage
• will make payments of $1,050.62 every month
• will pay $165,188.90 in interest costs over the 25 years

2. Mr. & Mrs. Plan Ahead:

• will take 14 years to pay off their $150,000 mortgage
• will make payments of $605 every two weeks
• will pay $70,659.16 in interest costs over 14 years

Mr. & Mrs. Plan Ahead shaved 57% off their interest costs, over $94,500!

Who do you think used the right tools and the right approach?

You can do the same thing with a little planning and the HomeCalculator.

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Our Customers Write:

When we were looking for mortgage financing, a major financial institution was offering a cashback equivalent to 3 per cent of the mortgage amount, which seemed like a wonderful deal. The only provisos were that we had to commit to a five year term, which we wanted anyway, and that we had to accept the 'posted rate'.

The HomeCalculator enabled us to compare different mortgage offers and quickly determine the best deal. We were surprised to find that by negotiating just a half point off the posted rate--instead of taking the cashback offer--we would lower our monthly payments and shave nearly $3,000 more off the principal by the end of the five year term! Our comparison was even based on applying the cashback directly to the mortgage to reduce the amount initially borrowed.

Fortunately, armed with the HomeCalculator's accurate information, we were able to negotiate a full point off the posted rate with a different lender, making our financing decision even easier. The HomeCalculator gave us the power of knowledge to save ourselves literally thousands of dollars. We highly recommend HomeCalculator to anyone interested in substantially reducing his or her mortgage financing costs.

Michael Turnbull and MaryAnne Fenton

Who should use the HomeCalculator?

The HomeCalculator is ideal for consumers, real estate agents, financial planners, financial institutions, professional accountants, businesses, and corporations.

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Compounding

All Canadian mortgages require that interest be calculated semi-annually. The only exception is variable rate mortgages. Variable rate mortgages, U.S. mortgages, and personal loans, all calculate interest monthly. The frequency of interest calculations is also known as compounding.

The more often interest is calculated, the higher the effective interest rate is, and the higher the interest will be. Therefore, if you are investing money, frequent compounding is desirable. On the other hand, if you are borrowing money, less often compounding is desirable because it reduces the effective interest rate .

U.S. mortgage software usually does not allow for semi-annual compounding. The HomeCalculator can be set to semi-annual or monthly compounding. Therefore, all Canadian mortgages, all U.S. mortgages, and all personal loans can be calculated.

Interest Factors

Most financial institutions use interest factors to convert semi-annual compounding to more frequent payment structures. They also use different numbers of days per year when making these calculations. For monthly payments, some use 360 days per year, whereas others use 365 days per year. For more frequent payments, most use 365 days per year, but some adjust the days to 366 for leap years. Other institutions use a method that avoids interest factors altogether, yet provides the most accurate calculation of all the methods.

Mortgage Term vs. Amortization Period

The mortgage term, usually five years or less, is how long a lender agrees to lend out money for until it becomes payable in full. On the other hand, the amortization period, usually 25 years or less, is how long it will take to repay the total amount borrowed.

Although the mortgage term is easy to figure out (check your mortgage documents), the amortization period can change with each payment. When you make any prepayments, increase or decrease your payments, skip payments, or renew your mortgage at a different interest rate, you are affecting the balance between principal and interest. Anytime you affect this balance, you will affect the amortization period on your mortgage.

Payments

There are ten different standard payments for mortgages. The most common is monthly. There are also semi-monthly, biweekly, and weekly mortgage payments. However, there are three different sets of these payments: non-accelerated, partially accelerated, and fully accelerated. This adds up to 9 different payments plus the standard monthly payment. Each is calculated differently, each has advantages and disadvantages.

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