Average Mortgage Payments in Montreal

Jessica Lyn
by Jessica Lyn February 6, 2017 / No Comments

Montreal, Canada’s second most populous city, saw a 4.8% increase in the average home price last year, according to the Canadian Real Estate Association. In December 2016, the average price of a home in Montreal was $360,174.

To determine what the average monthly mortgage payment would be on a $360,174 home, a couple decisions need to be made. We’ll have to decide how large of a down payment will be placed, what the best mortgage rate available is, the length of the mortgage’s amortization period, and the payment frequency.

Down payment
Since the average home price for a home in Montreal is below the $500,000 threshold, the minimum down payment required is 5% of the home’s purchase price.

However, if you were looking to purchase a home in the Montreal area for a price above $500,000, the minimum down payment would be 10%. It can be calculated as follows:

  • If the home price is above $500,000, the minimum down payment is 10% of the portion of the home’s price above $500,000, plus 5% of $500,000 (which is $25,000). The formula is as follows: $500,000 x 5% + (home price – $500,000 x 10%).
  • If the home price is $1,000,000 or more, the minimum down payment is 20% of the home price. The formula is as follows: minimum down payment = house price x 20%

Getting back to the average home in Montreal, the minimum down payment of 5% of $360,174 would be $18,009. Because the down payment is below 20%, $12,318 in mortgage insurance will be required. For a home with a selling price of $360,174, a down payment of 20% would be $72,035.

Assuming we make the minimum 5% down payment, the total mortgage required to purchase the average Montreal home would be $354,483. This value is calculated by subtracting our down payment from the asking price of the home and adding on the required mortgage insurance.

Mortgage rate
Securing a low mortgage rate helps reduce the total interest paid over the life of your mortgage. To secure the best mortgage rate, compare rates from multiple mortgage providers or enlist the help of a mortgage broker to compare mortgage rates on your behalf.

When comparing mortgage rates, you’ll come across the two most common mortgage rate options: fixed and variable rates. With a fixed-rate mortgage rate, your mortgage payments will always be for the same amount. However, if you choose a variable mortgage rate, your mortgage payments will vary as your rate will fluctuate with the prime rate.

Once you decide between a fixed or variable rate, you’ll have to decide on the term of your mortgage rate. The term can span multiple years, with the most common being five years. To calculate the average mortgage payment in Montreal, we’ll use the best 5-year fixed rate currently on the market of 2.49%.

Amortization period
When selecting your mortgage, you’ll also be required to pick an amortization period, which determines how long you’ll take to pay off your mortgage. A shorter amortization period means more of your payments will go toward paying down the principal of your mortgage. If you opt for a longer amortization period, your mortgage payments will decrease, but a larger portion will go to paying off interest—not the principal—on your mortgage.

When deciding on an amortization period, you need to be honest about your ability to meet your mortgage payments and whether you can handle larger payments if your rate rises. Amortization periods typically range between five and 30 years, with the most popular term for new mortgages being 25 years. This will be the period used for our calculation.

Payment frequency
Mortgage payments can occur monthly, bi-weekly, or accelerated bi-weekly. You should choose the payment frequency that works best for your lifestyle. To calculate the average mortgage payment in Montreal, we’ll use a monthly payment schedule.

Mortgage payment
Now that we’ve decided on a 5% down payment, and the best 5-year fixed mortgage rate of 2.49% with a 25-year amortization, we can use RateHub’s mortgage payment calculator to determine our monthly mortgage payment. The average monthly mortgage payment for a $360,174 home in Montreal is $1,586.

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