Canadian Mortgages on 12C



#2

I've recently switched back to my 12C after using the 17BII for mortgage calculations. While I use the solver to program the Canadian mortgage factor in the 17BII, there is no solver in the 12C. Any idea how I can do this on my 12C?
Thanks in advance for any response.


#3

The 12C is programmable. You may not be able to accomplish the Solver-type user interface, but if you know the algorithm, you should be able to write a program to do it.

Your question rang a bell in my memory - I looked in the various manuals I have for anything to do with Canadian finances. The HP10B manual, on page 105, tells exactly how to do it on a 10B, which has an interest rate conversion function which doesn't seem to be on the 12C. You convert the nominal rate to an effective rate based on the two compounding periods per year used in Canada. Then you convert that effective rate back to a nominal rate which the book calls a "Canadian mortgage factor", by specifying 12 payments per year. Then the calculated nominal rate makes the TVM function give the correct results. In the example, a 12% nominal rate at two compounding periods per year gives 12.36% effective rate, which at 12 payments per year gives 11.71% Canadian mortgage factor. The HP12C manual has a section on interest rate conversions on pages 179-181. It shows how to do conversions from nominal rate to effective rate and vice-versa, manually and with a program.

This is not my area of expertise, but I hope these pointers help you. You might want to get a 10B, I got mine at WalMart for about $15 clearance price.

#4

Hi,


I found an interesting page for you at here .

I will develop this more practically on my web site page and as soon as it's updated I'll meil you the html code.

As I'm not very familiar with this all I need to know is what kind of rate is given by the financial institutions : is it annual, semi-annual or monthly ?

Good luck !

Thibaut

#5

Hello,


I've just calculated for you the formula.

The Canadian mortgages are actualized on a semi-annual basis on the "yield" rate given, while the American mortgages are calculated on a monthly basis on the given "yield".

Just note that, as demonstrated, the American financial institutions are the most greedy, the Canadian far less. The law in France and Belgium oblige the banks and other lenders to show the APR, which makes all offers more comparable.

So what you actually need is to convert
a) the canadian yield into APR
b) this APR into the american yield
to use correctly your 12C with Canadian mortgages.

There are several way of doing this, including the financial solver of the 12C, what I don't recommend because you may by mistake forget one value of this conversion in the financial registers and use it your final calculation. One really has to be very careful with financial calculations. It's amazing to see how simple maths (+,-,*,/ and ^) can become so complicated.

So, let's calculate the APR (i'll call it 'i') for the canadin mortgage.

i = APR
ic= showed annual percentage of the canadian mortgage

Since it's capitalized twice in the year,

i = (1+ic/2)^2-1

and the reverse is

ic = 2((1+i)^2-1)

So, if the showed rate is 12%, the APR is 12.36%


Now we've got this, we need to convert the APR into a monthly capitalized rate, to get the value to be inputed into the i variable of your 12C, as it uses the american annuity formula.

im = showed percentage of american mortgages
i = PAR

i = (1+im/12)^12-1
and the reverse is
im = 12((1+i)^(1/12)-1)

So the 'only' thing we have to do is to replace in the last statement i with the calculated value of ic, so


im = 12((1+ic/2)^(1/6)-1)


If you take the former example :

if ic = 12%
i = 12.36%
im = 11.71%, which is the value you have to key in i (in%!)

Don't forget in these formulas to key in percentages in real values, ie 12% = .12, or it won't work !


#6

Thanks Thibaut and Ellis for your assistance. I will try out the formula and report back. Also found a similar method on the hp site which I'm trying out as well.


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