How the math works
Canadian mortgage payments are calculated using a standard amortization formula, but with one important quirk: rates are compounded semi-annually (twice per year) rather than monthly. This is a federal regulation under the Interest Act.
The formula converts your stated annual rate into an effective monthly rate using semi-annual compounding, then projects your payment so that you'd pay off the entire loan over the amortization period (usually 25-30 years) if rates stayed the same forever.
Of course, rates don't stay the same — your term (usually 5 years) is the period during which your specific rate is locked in. At the end of the term, you renew at whatever rates are current then.
Why your down payment changes the picture
Down payments below 20% of purchase price trigger mandatory CMHC mortgage default insurance. The premium is calculated as a percentage of your mortgage amount and ranges from 2.8% to 4.0% depending on your down payment.
Crucially, the premium is added to your mortgage rather than paid upfront. So a 5% down payment on a $500,000 home means you're financing $475,000 plus a roughly $19,000 insurance premium = $494,000 of actual mortgage. Your monthly payment is calculated on the $494,000.
The threshold matters. A 19% down payment means you're paying CMHC. A 20% down payment means you're not. On a $500,000 home, that's a savings of about $13,000 over the life of the mortgage.
Frequency: monthly vs accelerated biweekly
Monthly is the default — 12 payments per year. Biweekly means 26 payments per year (every two weeks), with each payment being half of a monthly amount. Accelerated biweekly is the same as biweekly, but the payment is fractionally larger — equivalent to making 13 monthly payments per year instead of 12.
That extra month of payment, applied directly to principal, knocks years off your amortization. On a 25-year mortgage at typical rates, accelerated biweekly typically pays off the loan in about 22 years instead of 25.
Most lenders offer both biweekly and accelerated biweekly. Make sure you know which one you're getting — they're often listed by similar names but have very different long-term effects.