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Mortgage Calculation Differences?

  1. Aug 12, 2013 #1
    Mortgage Calculation Differences??!

    So, i'm doing some mortgage calculations and I am finding some discrepancies between using the mortgage calculators on bank websites and by using the formula on paper on in excel.

    For the following mortgage:
    P= 200,000
    I = 6.5%
    N = 30 Years

    Using the formula Pr(1+r)^n / (1+r)^n - 1 OR using PMT in excel yields a monthly payment of $1264.14 (Same example is in http://en.wikipedia.org/wiki/Mortgage_calculator)

    However, using Canadian online mortgage calculators (https://www.rbcroyalbank.com/cgi-bin/mortgage/mpc/start.cgi/start) or (http://www.bmo.com/calculators/mortgagecalculator/) show a monthly payment of $1252.80.

    I have checked the numbers on a few different bank sites and they all have the same amount of $1252.80

    How are they calculating this number??

  2. jcsd
  3. Aug 12, 2013 #2


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    Homework Helper

    The banks are stating APR as opposed to simple interest. This means that the 6.5% is taking the effects of compounding into account.
    Last edited: Aug 12, 2013
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