How this calculator works
The quoted nominal rate determines interest and scheduled payments. Points and upfront charges reduce the cash you effectively receive, while annual fees add to monthly cash outflows. The estimated borrowing rate solves the present-value equation for these cash flows. Fixed rate is the default; optional adjustable scenarios expose reset timing and caps. This is a planning IRR, not a lender's regulatory APR disclosure.
Formula
Net advance = original principal - upfront points - upfront fees. Solve net advance = sum(payment_k plus allocated fees)/(1 + j)^k for monthly rate j. Estimated nominal annual cash-flow rate = 12j. Effective annual rate = (1 + j)^12 - 1. Canadian nominal rates still use semi-annual compounding to calculate contractual payments.
Worked example
A $1,200 loan at 0% over twelve months pays $100 monthly. With no charges, the estimated borrowing rate is 0%. With a $12 annual fee allocated as $1 each month, total cash paid is $1,212 even though the quoted interest rate stays 0%.
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Frequently asked questions
Why can the cash-flow rate exceed the quoted rate?
Fees reduce the advance or increase repayments. Canadian nominal semi-annual and monthly cash-flow conventions can also differ even without fees.
Does this find a market mortgage rate?
No. It evaluates the rate and costs you enter. It does not retrieve lender offers or predict future rates.
Which fees should I include?
Include the costs you want compared as borrowing costs. A regulatory APR may include or exclude different charges under local rules.