a couple looking at their new home after taking out a mortgage loan.

So, you’re about to make one of the single most important investments in your lifetime—buying a house. However, for many people, understanding the technicalities regarding mortgage payments can often be challenging. This, however, is simply because they haven’t been properly apprised of everything involved.

In this post, we’re going to demystify mortgage payments for you so that you know exactly what to expect when you get your mortgage statement.

An Overview of Mortgage Payments

Your monthly mortgage payment is primarily determined by the size and the amortization period of your mortgage loan. The size of your mortgage loan is the amount of money that you’ve borrowed from a lender, while the amortization period of your mortgage loan refers to the time that you’re given to repay the debt. Of course, the longer your amortization period, the lower your monthly payment.

The federal government in Canada sets most of the mortgage regulations—maximum amortization periods, minimum down payments, CMCH insurance (mortgage default insurance).

Down Payment Regulations

In Canada, the minimum down payment amount is 5 percent of the value of the house under $500,000, then 10 percent of the portion of the price between $500,000 and $1,000,000. For houses that are valued above $1,000,000, the minimum down payment amount is 20 percent of the total purchase price.

A person signing mortgage papers.

Amortization Period Regulations

The maximum amortization period set by the federal government is 25 years for mortgages that have down payments less than 20 percent and 35 years for mortgages with down payments more than that.

Mortgage Default Insurance Regulations

CMCH insurance or mortgage default insurance must be purchased on mortgages that have down payments under 20 percent of the purchase price.

Mortgage Regulations in Alberta

Alberta is one of the more affordable provinces to live in because, in addition to Canada-wide regulations, it has unique mortgages rules and fees along with specific mortgage rates. In Alberta, a land transfer tax isn’t charged on the purchase of property. In place of that, a land title transfer fee is charged, which is a far lower amount.

Mortgage Rates

Lenders tend to charge different interest rates on mortgages in Canada’s provinces.

Fees and Taxes Associated with a Mortgage in Alberta

The land title transfer tax charged in Alberta consists of two parts: one that’s charged on the value of the property, and the other that’s charged on the mortgage amount.

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