# Mortgage Calculation Differences?

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1. Aug 12, 2013

### bingie

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??

Thanks

2. Aug 12, 2013

### rcgldr

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