Are you planning to buy a condo in Canada? Understanding mortgage interest and principal repayment is crucial. In this post, we’ll explain how much you’ll pay monthly for a $200,000 condo with a 20% down payment and a 4.5% mortgage interest rate.

#### 1. Calculating Down Payment and Mortgage Amount

First, if you plan to buy a $200,000 condo with a 20% down payment, here’s the calculation:

**Down Payment:**

$200,000 × 0.2 = $40,000**Mortgage Amount:**

$200,000 – $40,000 = $160,000

#### 2. Calculating Monthly Payments

Next, let’s calculate the monthly payment for the $160,000 mortgage. The annual interest rate is 4.5%, and the mortgage term is typically 25 years (300 months).

**Monthly Interest Rate:**

4.5% ÷ 12 = 0.00375**Monthly Payment Formula:**

M = P × [ r(1+r)^n ] / [ (1+r)^n – 1 ]

Where,

- M is the monthly payment,
- P is the loan amount ($160,000),
- r is the monthly interest rate (0.00375),
- n is the total number of payments (300 months).

Using these values, the calculation is:

M = $160,000 × [ 0.00375(1+0.00375)^300 ] / [ (1+0.00375)^300 – 1 ] ≈ $889.60

Therefore, you will pay approximately $889.60 per month.

#### 3. Monthly Interest and Principal Repayment

The monthly payment of $889.60 includes both interest and principal repayment. Initially, a larger portion goes towards interest, and over time, more goes towards the principal. Here’s an example for the first and second months:

**First Month:**

Interest: $160,000 × 0.00375 = $600

Principal Repayment: $889.60 – $600 = $289.60**Second Month:**

Interest: $159,710.40 × 0.00375 ≈ $598.91

Principal Repayment: $889.60 – $598.91 ≈ $290.69

This pattern continues each month, with the interest portion decreasing and the principal repayment increasing, while the total monthly payment remains constant.

#### Conclusion

Understanding mortgage payments is essential when buying a condo. By knowing how much you’ll pay monthly and the breakdown of interest and principal, you can better plan your finances. Use this information to make informed decisions and manage your budget effectively.

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