A term loan's payment is fixed by three numbers: the principal, the rate and the term. This calculator applies the Canadian convention for fixed-rate commercial mortgages — interest compounding semi-annually, not in advance — so the estimate matches what a Canadian lender will actually quote you.
The Canadian compounding detail
Canadian fixed-rate mortgages and many commercial loans compound interest semi-annually even when payments are monthly. The effect is a payment slightly lower than the plain annual formula would suggest — typically a few dollars per thousand borrowed per month, which adds up across a five-year term.
Variable-rate products instead compound at payment frequency, so a floating-rate line of credit prices differently from the fixed loan modelled here.
What lenders add on top
The quoted payment is principal and interest only. Add CST registration fees for secured loans, lender setup fees (typically 1 percent), and any life-insurance premium the lender markets alongside the loan. The all-in cost of a business loan is routinely a full point above the headline rate.
Frequently asked questions
Is this the same as my bank's calculator?
For fixed-rate products, yes — semi-annual compounding is the Canadian convention. For variable-rate loans your bank's own math may differ; treat the result as a close estimate, and confirm the final figure on the loan agreement.
Connectica provides information only, not financial, investment, legal or tax advice. Figures on this page are estimates and generalizations — confirm anything that matters with the relevant professional or authority.