Commercial mortgage calculator.

Method and limitations

Formulas: the per-payment rate is i = (1 + r/m)^m/f − 1, where r is the stated annual rate, m the compounding periods a year (2 semi-annual, 12 monthly, 1 annual) and f the payments a year. The payment is P × i / (1 − (1 + i)⁻ⁿ) over the amortization, and the balance after the term is P(1 + i)^k − payment × ((1 + i)^k − 1) / i for k payments. Debt service coverage is net operating income divided by a year of payments; loan-to-value is the mortgage divided by the property value.

Worked example: $1,500,000.00 at 6.5% compounded semi-annually, 25-year amortization, 5-year term, monthly payments. The payment is $10,047.36; after 60 payments $1,356,833.37 is still owing and $459,674.78 of interest has been paid. With $180,000.00 of net operating income, debt service coverage is 1.49x, and against a $2,200,000.00 value the loan-to-value is 68.2%. Switched to interest-only, the payment is $8,017.11 and the whole $1,500,000.00 is due at the end of the term.

Why semi-annual is the default: section 6 of the Interest Act says a mortgage on real property repaid by blended payments must state the rate “calculated yearly or half-yearly, not in advance”. Half-yearly is therefore the starting choice here; pick monthly if your term sheet says so. Your commitment letter, not this tool, decides.

What this is not: no lender rates, fees or qualification rules are built in, and the tool does not say what coverage or loan-to-value a lender will accept. Fees, insurance, property tax and renewal rate changes are outside the calculation.

FAQ

How is a commercial mortgage payment calculated in Canada?

The payment comes from the standard amortization formula using the per-payment rate implied by your compounding method. On $1,500,000.00 at 6.5% semi-annual over 25 years it is $10,047.36 a month.

Why is there a balance at the end of the term?

Amortization sets the payment size; the term is how long the rate is fixed. With a 5-year term on a 25-year amortization, $1,356,833.37 remains in the example and has to be renewed or refinanced.

What is debt service coverage?

Net operating income divided by a year of mortgage payments. A figure above 1.00x means the income covers the payments; what a lender requires is set by the lender.

Does semi-annual or monthly compounding change the payment?

Slightly. Semi-annual compounding gives a marginally lower effective rate than monthly at the same stated rate, so the payment is a little lower. Use the method your lender states.

Can I model an interest-only commercial mortgage?

Yes, tick the interest-only box. The payment is the balance times the per-payment rate and no principal is repaid during the term.

Sources

• Interest Act, section 6 (Justice Laws Website), retrieved October 2026