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Mortgage model guide

US, Australian, Canadian & UK mortgage models

One engine can model the same fixed-rate scenario differently when the market convention differs. This guide explains the conventions behind the country selector, what each result means, and where a lender's result may differ.

What every model does—and does not do

The engine produces a fixed-rate principal-and-interest schedule from the amount, quoted rate, term, payment frequency, and other inputs selected. Interest is calculated on the modeled outstanding balance each period; scheduled payments cover that period's interest before principal. An interest-only selection does not repay capital through its modeled interest payment.

A result is a calculation, not a lender quote or approval. Taxes, insurance, mortgage insurance, fees, property valuation, credit, verified income, household spending, product availability, and legal terms can change a real payment or decision. Read the methodology for the calculation sequence and the accuracy standards for rounding and verification limits.

United States: payment components and PMI context

The US model supports monthly, weekly, biweekly, and fortnightly schedules, along with conventional, fixed-rate, principal-and-interest, and interest-only scenario types. It uses US dollars and converts the entered annual rate to the relevant periodic rate. “Biweekly” means 26 periods per year in the model; the legacy fortnightly option is retained for compatibility, though US products commonly use the term biweekly.

PMI, property tax, homeowners insurance, and HOA are separate concepts. PMI is a user-provided monthly cost, never an amount the engine prices. The model does not calculate FHA, VA, or USDA eligibility or program-specific insurance. Compare the calculated principal-and-interest line with the separately entered housing costs, then confirm the actual payment collection and insurance terms with the lender or servicer.

Australia: LVR, LMI, offsets, and actual payment periods

The Australian model uses Australian dollars and supports monthly, weekly, and fortnightly payment frequencies for principal-and-interest, interest-only, and fixed-rate scenarios. Weekly and fortnightly scenarios use their actual periodic rate; they are not modeled as half of a monthly payment. This matters when comparing cash-flow cadence or payoff timing.

The calculator can show the interest-bearing balance implied by a supplied offset balance as a separate country-concept result. That informational figure does not recalculate the main amortization schedule. The model does not infer transaction timing, redraw availability, lender pricing, or LMI. LVR and LMI are useful terms for framing the scenario, but LMI cost and product rules remain lender-specific. Check how a real account calculates its daily balance and whether funds are available when you expect them to be.

Canada: term, amortization, and semi-annual conversion

The Canadian model uses Canadian dollars and supports monthly, semi-monthly, biweekly, and weekly schedules. Its key convention is the quoted annual rate: it converts the entered rate from a nominal semi-annual compounding convention to the selected payment period. This is why an otherwise identical Canadian scenario can differ from a simple annual-rate-divided-by-periods calculation.

Mortgage term and amortization period are represented separately. The model also exposes a qualifying-rate helper using the greater of the contract rate plus two percentage points and 5.25%. That is a transparent stress-test model, not a universal approval decision. Mortgage insurance premiums, eligibility, and “accelerated” payment product treatment are not calculated or inferred from an ordinary weekly or biweekly frequency. Verify the term, renewal assumptions, payment type, and qualifying criteria in the lender's documents.

United Kingdom: repayment plans and interest-only separation

The UK model uses pounds sterling and monthly payments. It supports repayment, interest-only, and fixed-rate scenario types. For an interest-only scenario, the modeled payment does not reduce capital: any repayment strategy is a separate consideration. For a repayment scenario, the schedule shows the modeled balance reduction under the entered fixed terms.

LTV, affordability, rate stress, initial deal period, and repayment strategy are relevant concepts, but the initial deal period is metadata in this model—it does not change the supplied rate calculation. A lender may assess income, expenditure, future rate effects, and the credibility of an interest-only repayment strategy in ways this calculation cannot. Confirm the deal end date, reversion assumptions, and repayment-strategy evidence directly with the lender.

Rule provenance and review

The version, effective date, review date, and references below come directly from the country adapter metadata. References provide context; they are not imported as live rates or underwriting rules. The adapter—not this page—remains the source of truth for supported frequencies, types, and calculation conventions.

Use the same convention across a decision

Choose the country model that matches the terms you are evaluating, then keep it consistent while testing payment, affordability, payoff, refinance, or stress scenarios. For a decision involving a real loan, replace estimates with written terms and ask the lender how it calculates interest, applies extra payments, and assesses affordability.

Start a payment scenario · view sources and reference use · compare scenarios in the lab